Coming hot on the heels of an official announcement from USD Coin (USDC) issuer Circle Pay, stablecoin giant Tether has officially confirmed that it will support Ethereum’s upcoming Merge upgrade. In that context, it will switch to a Proof-of-Stake (PoS) consensus mechanism-based blockchain.
Their announcement came on the same day as its stablecoin competitor, who pledged that they will only support Ethereum’s much-expected upgrade.
In an August 9 statement, Tether labeled the Merge as one of the “most significant moments in blockchain history.” Furthermore, it outlined that it will work in accordance with Ethereum’s upgrade schedule, which is now expected to go through on September 19, 2022.
“Tether believes that in order to avoid any disruption to the community, especially when using our tokens in DeFi projects and platforms, it’s important that the transition to POS is not weaponized to cause confusion and harm within the ecosystem.”
“Tether will closely follow the progress and preparations for this event and will support POS Ethereum in line with the official schedule. We believe that a smooth transition is essential for the long term health of the DeFi ecosystem and its platforms, including those using our tokens.”
While the official statement only came out today, the stablecoin issuer’s chief technology officer (CTO) Paolo Ardoino had already previously shown in July that they planned to fully support the post-Merge ETH2.
He didn't outright say he would support PoS/ETH2 by default – it looks like he will support the chain that will lead to more stability and avoid disruptions. Granted, this will probably still end up being ETH2, but I think it slightly shifts the odds in Galois's favour.
— FatMan (@FatManTerra) July 31, 2022
USDT is currently the biggest stablecoin in crypto with a total market capitalization of $66.6 billion, while USDC is close at $54.1 billion according to CoinGecko. Both of these stablecoins have a considerable amount of their circulating supply on Ethereum’s current Proof-of-Work blockchain, with USDT at $32.3 billion and USDC topping at $45.1 billion at the time of publication.
Taking into consideration the size of these stablecoins and their dominance over the stablecoin market, the show of this support, in this case, should create a seamless transition for the Ethereum, USDT, and USDC ecosystems, and the wider crypto market in general.
But as Vitalik Buterin recently said, their power might possibly cause issues in the future Ethereum hard forks, since centralized brands like Circle and Tether could decide to use the forked chain of their in-house preference, instead of what the Ethereum community has proposed. He stated:
“I think in the further future, that definitely becomes more of a concern. Basically, the fact that USDC’s decision of which chain to consider as Ethereum could become a significant decider in future contentious hard forks.”
Stablecoin issuers (Circle/Tether) control fork choice in Ethereum.
What happens when the state pressures Circle to support a fork that goes against “eth community social contract?” https://t.co/dP7ZPFiJ0u
— Brandon Quittem (@Bquittem) August 6, 2022
This week Ethereum will undergo its final Merge test through the Goerli testnet, and in case all goes as planned, there is a major expectation that the September 19 Merge date is not likely to be delayed.