- Tether and Circle will only support assets on Ethereum’s Proof-of-Stake chain following the Merge, both companies announced today.
- Tether said the Merge shouldn’t be “weaponized” against the Ethereum community, while Circle stated that only a “single valid ‘version’” of USDC could possibly exist.
- Some of Ethereum’s miners are planning to fork Ethereum once it transitions to Proof-of-Work in order to keep a Proof-of-Work version running.
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Neither USDT nor USDC will be backed by reserves on a potential Ethereum Proof-of-Work fork, Tether and Circle announced today.
Proof-of-Stake Ethereum Solidifies Support
Ethereum’s potential Proof-of-Work fork is failing to garner support.
Tether and Circle, the two largest centralized stablecoin issuers in the crypto space, both announced today that they will support Ethereum’s transition to Proof-of-Stake and not a potential Proof-of-Work fork.
Tether stated in a blog post that Ethereum’s transition to Proof-of-Stake shouldn’t be “weaponized” and cause any disruption to decentralized finance (DeFi) protocols, centralized platforms, and the crypto community at large. Circle declared that, regardless of Ethereum forks, its USDC stablecoin could “only exist as a single valid ‘version’” and that the company fully supported Ethereum’s upgrade to Proof-of-Stake.
Ethereum is set to change its consensus algorithm from Proof-of-Work to Proof-of-Stake, a highly anticipated transition known in the crypto community as “the Merge.” Upon completion of the Merge, Proof-of-Work miners will become obsolete since consensus will be achieved through a different set of network participants called validators. This has recently led prominent figures in the Chinese mining community to state that they will fork Ethereum to keep a Proof-of-Work version running even after the blockchain officially switches to Proof-of-Stake. Tron founder Justin Sun has stated he would support such a plan.
Tether and Circle’s decision to back Ethereum’s future Proof-of-Stake chain instead of a potential Proof-of-Work chain casts doubts on the long-term viability of the miner-led initiative, as neither the USDT nor the USDC on the Proof-of-Work chain will be backed by reserves. And while crypto exchanges BitMEX and Poloniex have listed a token for the Proof-of-Work chain (ETHW), interest in it has been low so far.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.