According to Tether, a seamless transition is crucial for the DeFi ecosystem’s platforms, including those that use their tokens.
Stablecoin juggernaut Tether has now formally confirmed its support for Ethereum’s forthcoming Merge upgrade and conversion to a Proof-of-Stake (PoS) consensus mechanism-based blockchain, after an official announcement by USD Coin (USDC) issuer Circle Pay.
The announcement was made on the same day as a stablecoin rival who promised to only support the much-anticipated upgrade to Ethereum.
The Merge, which Tether called one of the “most critical moments in blockchain history” in a statement on August 9, will function in accordance with the Ethereum upgrade schedule, which is presently scheduled to take place on September 19.
“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,” Tether added.
The stablecoin issuer’s chief technology officer Paolo Ardoino had previously stated in July that they intended to support the post-Merge ETH2, even though the official announcement was just made today.
According to CoinGecko, USDC is not far behind USDT with a market worth of $54.1 billion, making USDT the largest stablecoin in existence right now. On Ethereum’s current Proof-of-Work blockchain, both stablecoins have a sizeable portion of their circulating supply. At the time of writing, USDT has $32.3 billion and USDC has $45.1 billion, respectively.
The demonstration of support, in this case, should lead to a smooth transition for the Ethereum, USDT, and USDC ecosystems. As well as the larger crypto market as a whole, given the scale of these stablecoins and their dominance over the stablecoin market.
However, as Vitalik Buterin has cautioned, because of their influence, centralized organizations like Tether and Circle might decide to employ the forked chain of their choosing rather than what the Ethereum community has suggested in the event of future hard forks.
“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,” he said.
The Goerli testnet will host Ethereum’s final Merge trial this week, and if everything goes according to plan, the Sept. 19 Merge date shouldn’t be postponed.