Vitalik Buterin stated that centralized stablecoins like USDC & USDT will play a big deciding role in upcoming hard forks.
A centralized stablecoin like Tether (USDT) or Circle USD (USDC), according to Ethereum co-founder Vitalik Buterin, “may become a crucial decider in future contentious hard forks.”
On August 3, Buterin and Illia Polosukhin, the co-founder of the Near Protocol (NEAR), spoke about Ethereum’s impending Merge at the BUIDL Asia conference in Seoul.
According to the co-founder of Ethereum, centralized stablecoins may play a “major” role in determining which blockchain technology the business will “respect” in case of a hard fork.
A hard fork happens when a blockchain network’s protocol undergoes a significant change that effectively splits it into two versions. Typically, one chain becomes the preferred option.
“At the moment of the merge, you will have two [separate] networks […] and then you have exchanges, you have Oracle providers, you have stablecoin providers that are kind of deciding in a way, which one they respect.”
“Because at that point, you’ll have 100 billion of USDT on one chain and 100 billion of USDT on the other chain, cryptographically — and so, they [Tether] need to stop respecting one of them,” explained Buterin.
Buterin countered that the centralized stablecoin issue is more of a concern for prospective hard forks and claimed that he “had not seen any indication” that such a disagreement would be a problem in Ethereum’s imminent Merge.
“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.”
In the subsequent five to ten years, he continued, Ethereum might experience more controversial hard forks where centralized stablecoin providers might have more sway.
“At that point, maybe the Ethereum foundation will be weaker, maybe the ETH 2 client teams will have more power, and maybe someone like Coinbase, would both run a stablecoin and have bought up one of the client teams by then […] like lots of those kinds of things could happen,” he said.
Vitalik suggested using a variety of stablecoins as a possible countermeasure to centralized actors:
“The best answer I can come up with is to encourage the adoption of more kinds of stablecoins. Basically, you know, people could use USDC, but then they could also use DAI and like, at this point, I mean, like DAI has taken this kind of very decisive route of saying ‘we’re not going to be purely crypto economic we’re going to be a wrapper for a whole bunch of real world assets.’”
The Merge, in which Ethereum switches from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus method, is one of the most significant technological improvements to happen to Ethereum since its founding.
After the Goerli test net was successfully integrated in the middle of August, The Merge was planned to take place. Ethereum developers are shooting for September 19 as the permanent date for the merger of the existing PoW chain to the PoS chain.
