On Tuesday (August 9),\u00a0Circle Internet Financial Limited \u2014 the issuer of fully-collateralized stablecoin USD Coin ($USDC), which was launched on Ethereum in September 2018 \u2014 made an announcement that made most Ethereum ($ETH) HODLers breathe a sign of relief.<\/p>\n
Here is how Ethereum Foundation\u00a0explains\u00a0The Merge (expected to take place around September 19):<\/p>\n
\u201cThe Merge represents the joining of the existing execution layer of Ethereum (the Mainnet we use today) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminates the need for energy-intensive mining and instead secures the network using staked ETH. A truly exciting step in realizing the Ethereum vision \u2013 more scalability, security, and sustainability.<\/em><\/p>\n \u201cIt\u2019s important to remember that initially, the\u00a0Beacon Chain\u00a0shipped separately from\u00a0Mainnet. Ethereum Mainnet \u2013 with all it\u2019s accounts, balances, smart contracts, and blockchain state \u2013 continues to be secured by\u00a0proof-of-work, even while the Beacon Chain runs in parallel using\u00a0proof-of-stake. The approaching Merge is when these two systems finally come together, and proof-of-work is replaced permanently by proof-of-stake.<\/em><\/p>\n \u201cLet\u2019s consider an analogy. Imagine Ethereum is a spaceship that isn\u2019t quite ready for an interstellar voyage. With the Beacon Chain, the community has built a new engine and a hardened hull. After significant testing, it\u2019s almost time to hot-swap the new engine for the old mid-flight. This will merge the new, more efficient engine into the existing ship, ready to put in some serious lightyears and take on the universe.<\/em>\u201c<\/p>\n On August 5, CoinDesk\u00a0reported\u00a0that TRON founder had recently said that \u201che will support development on the existing Ethereum network following the expected merge in September.\u201d<\/p>\n The CoinDesk report went on to say:<\/p>\n \u201cDevelopers say the move away from a proof-of-work (PoW) system will make the network much cheaper, faster and environmentally friendly. It will also mean the end of an income stream for Ethereum miners, who are rewarded with ether (ETH) tokens for supplying resources to the blockchain. Miners produced over $620 million worth of ether in July alone,\u00a0data show, making The Merge akin to a death knell for a significant chunk of cash.<\/em><\/p>\n \u201cThat has prompted some prominent Chinese miners to propose a hard fork, so even as Ethereum undergoes The Merge and becomes validated by stakers, the miners will continue to support a newly separated PoW version of the chain \u2013 a move that could theoretically keep their financial activity intact.<\/em>\u201c<\/p>\n On the same day, Cointelegraph\u00a0reported\u00a0that \u201cspeaking at the BUIDL Asia event in Korea, Vitalik Buterin said that centralized stablecoins like USDC & USDT will become significant deciders in future hard forks\u201d (and that \u201chad not seen any indication\u201d that this would impact the Merge hard fork (which is expected to take place next month).<\/p>\n And on August 6, popular pseudonymous crypto analyst \u201cHasu\u201d, who is the Stratey Lead at Flashbots, took to Twitter to talk about this alleged attempt by some miners to create a new fork of Ethereum that uses PoW consensus:<\/p>\n He then added:<\/p>\n \u201ca lot of hashpower does not give this chain any significant value\u2026 the chance that a major stablecoin will honor redemptions on this fork over eth2 is not 5%, its not 1%, its a cold zero. anyone who says otherwise is a grifter\u2026 if anything goes wrong with the merge, it just gets delayed until the problems are fixed and then the merge happens a few weeks later\u2026 no one in the eth community apart from miners want to stay on proof of work\u2026 this fork chain will be a giant retail trap. miners, exchanges, traders are all trying to talk it up for their own self-interested reasons\u2026<\/em><\/p>\n \u201cno one wants to use or build ethpow. i have studied the etc, bch, and bsv forks and these were actually dividing their respective communities. in all cases, their minorities were actual believers and not in it for a short-term trade. ethpow doesnt have 1% of that support\u2026 crypto is full of bad projects that only exist to dump on retail, but that doesn\u2019t make it ok to support them. the fact that ghost chains like etc still exist does not vindicate that point\u2026 although most alt chains today are forks of ethereum, none has forked ethereum state. not because they didnt think of it but because its a completely stupid idea<\/em>\u201c<\/p>\n Well, earlier today, Circle published a blog post that stated that as the issuer of \u201cthe largest dollar-backed stablecoin issued on Ethereum\u201d it plans to \u201cfully and solely support the Ethereum proof-of-stake (PoS) chain post-merge.\u201d<\/p>\n Circle went on to say that it is aware that $USDC has \u201cbecome a core building block for Ethereum DeFi innovation\u201d and that it has \u201cfacilitated the adoption of L2 solutions and helped broaden the set of use cases that today rely on Ethereum\u2019s vast suite of capabilities.\u201d Circle also mentioned that it accepts \u201cthe responsibility\u201d it has for \u201cthe Ethereum ecosystem and businesses, developers and end users that depend on USDC,\u201d and that it intends to \u201cdo the right thing.\u201d<\/p>\n Circle also stated:<\/p>\n