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Centralized USDC might decide the fate of contentious ETH hard forks

05-Aug-2022 By: Shikha Jha
Centralized USDC mig

According to Ethereum co-founder Vitalik Buterin

centralized stablecoins like Tether (USDT) and Circle USD (USDC) might play a crucial role in future contentious hard forks.

On August 3, Buterin spoke at the BUIDL Asia conference in Seoul with Illia Polosukhin, co-founder of Near Protocol (NEAR), about Ethereum's impending Merge.

According to Ethereum's co-founder, centralized stablecoins may play a "significant" role in determining which blockchain technology the firm will "support" in the event of a hard fork.

A hard fork occurs when a blockchain network's protocol undergoes a significant change, resulting in two versions. Usually, one chain is favored over another.

“At the time of the merger, you will have two distinct networks and then you have exchanges, Oracle providers, and stablecoin providers who are sort of picking which one they respect.”

“As a result, they must stop honoring one of them since there will be 100B USDT on one chain and 100B USDT on the other at that moment.,” stated Buterin.

Buterin, on the other hand, noted that he "had not seen any evidence" that such a dispute would be an issue in Ethereum's impending Merge, emphasizing that the centralized stablecoin issue is more of a worry for future hard forks.

“It's something I believe will become more of an issue in the future. Basically, USDC's decision on which chain to consider as Ethereum might become a crucial deciding factor in future controversial hard forks.”

Vitalik recommended using several types of stablecoins as a potential antidote against centralized actors:

“The greatest solution I can think of is to promote the use of additional types of stablecoins. People might use USDC, but they could also use DAI, and at this point, I mean, DAI has chosen this sort of definite way of saying we're not going to be just cryptoeconomic, we're going to be a wrapper for a whole bunch of real-world assets.”

The Merge is one of the most significant technological changes to occur with Ethereum since its inception, as it transitions from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) consensus mechanism.

Following the successful integration of the Goerli test net in mid-August, Ethereum developers have set September 19 as the fixed date for the merging of the existing PoW chain to the PoS chain.

Read also: Cryptocurrency price update: ETHEREUM PRICE PREDICTION: Ethereum is ready for a new surge as it holds key uptrend support.

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