Coinbase has announced that it will pause ETH and other ERC-20 token transactions during the upcoming Ethereum merger.
The exchange does this as a precaution to ensure that their systems correctly reflect any changes introduced by the merger. The company will notify the public through its social media channels when it resumes ETH and ERC-20 deposits and withdrawals.
The upcoming Ethereum merger will see the Ethereum blockchain migrate from the energy-intensive proof-of-work consensus mechanism to the proof-of-stake consensus mechanism. The execution layer (Ethereum Virtual Machine) will be merged with the beacon chain, a new consensus layer, in a move that should have minimal effect on end users.
The merger is designed to reduce Ethereum’s energy footprint, enable greater decentralization through the use of validators in proof-of-stake instead of miners in proof-of-work, and pave the way for improved scalability through to a process called “sharding”. There will be no new Ethereum token issued after the merger.
The Ethereum dev team recently merged the Beacon Chain, the new Ethereum consensus layer, with the Goerli testnet runtime layer and is expected to merge the Beacon Chain with the Ethereum mainnet around mid- september. 2022. To minimize risk, many exchanges choose to suspend transactions related to ETH. Coinbase is one of them.
Exchange clarifies implications for different users
The exchange says that all funds will be safe throughout the merger process and no action is required from users. Post-merger staked ETH will appear as an ETH (ETH2) balance in a user’s Ethereum wallet, separate from the unstaked ETH balance. Coinbase created an ETH2 ticker to represent staked ETH, which will be removed after the merger as it does not represent a new ETH token. Likewise, the exchange warns users not to be fooled by anyone claiming that ETH can be “upgraded” to ETH2.
To become a validator on the new ETH network, a minimum of 32 ETH must be locked or “staked”. Validators are discouraged from approving invalid or dishonest transactions through cuts, where they lose some of their staked ETH if they choose to act dishonestly.
If there is less than one million ETH staked, stakers can earn up to 18% annual percentage return or interest. If there is more than a 100 million ETH staked, annual returns of 1.81% or less are possible. Staked ETH withdrawals are not expected until 2023.
Regarding ETH and ERC-20 withdrawals and deposits from institutional investors, Coinbase indicates that they are made before the merger.
Customers using Coinbase Cloud should expect a routine upgrade process, with approximately 10 minutes downtime.
Coinbase Wallet users holding non-fungible tokens, ETH tokens, ERC-20 tokens, or DeFi positions are unlikely to experience significant disruption. They can continue to transact on Ethereum after the merger is complete.
Binance, Tether, Circle Support Merge
Binance said it supports the merger and is closely monitoring new tokens from proof-of-work Ethereum forks, which there have been reports of. The exchange noted that tokens from these forks will go through a rigorous review process. He made no official announcement regarding the ETH and ERC-20 token pause.
Bybit, another exchange, said it would deposit the airdrop, deposit and withdrawal of hard fork tokens approved by its risk management and security teams.
Stablecoin giants Tether and Circle have expressed support for the merger. According to Circle, USDC is the largest US dollar-backed stablecoin on Ethereum.
To be[In]Crypto’s Latest Bitcoin (BTC) Analysis, Click here.
All information contained on our website is published in good faith and for general information purposes only. Any action the reader takes on the information found on our website is strictly at their own risk.