Centralized stablecoins such as Tether (USDT) and Circle USD (USDC) could become “an important determinant of contentious hard forks in the future,” according to ethereum co-founder Vitalik Buterin.
On Aug. 3, Buterin joined Near Protocol co-founder Illia Polosukhin at the BUIDL Asia conference in Seoul to discuss Ethereum’s upcoming merger.
The ethereum co-founder believes that centralized stablecoins could be an "important" determinant of which blockchain protocol the industry "maintains" in a hard fork.
A hard fork occurs when the protocol of a blockchain network changes fundamentally, effectively producing two versions. Often, one chain ends up being more popular than the other.
"At the moment of merger, there will be two (separate) networks ... and then there will be exchanges, there will be oracle providers, there will be stablecoin providers, and they will somehow decide which network to maintain."
“Because by then, there will be $100 billion in USDT on one chain and $100 billion in USDT on the other chain, so they (Tether) need to stop maintaining one of the chains,” Buterin explained.
However, Buterin said he “sees no indication” that such an argument would be an issue in ethereum’s upcoming merger, noting that the issue of centralized stablecoins is more of a problem for future hard forks.
“I think it will definitely become a more worrisome issue in the further future. Basically, the fact that USDC decides which chain to consider as Ethereum could be an important determinant in future contentious hard forks .”
He added that in the next five to ten years, ethereum may usher in more contentious hard forks, in which the role of centralized stablecoin providers may carry more weight.
"By then, maybe the Ethereum Foundation will be weaker, maybe the ETH 2 client team will have more power, maybe a company like Coinbase will both run a stablecoin and acquire one of the clients," he said. Team, […] a lot of that could happen."
Vitalik recommends choosing different kinds of stablecoins as a potential means of fighting centralized players:
“The best answer I can think of is to encourage people to adopt more kinds of stablecoins. Basically, people may use USDC, but they may also use DAI. At this point, I mean, DAI has taken this A very decisive line, saying 'we're not going to be a pure crypto economy, we're going to be a wrapper around a lot of real-world assets.'”
The merger is one of the most critical technical updates to occur on Ethereum since its inception, as it moves from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.
The merger is scheduled to proceed after a successful Goerli testnet integration in mid-August, with ethereum developers targeting September 19 as the final date for the current merger.
Weatherly
