Thursday, October 6, 2022

Binance Will Support Ethereum Merge, Consider Fork Tokens

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Key Takeaways

  • Binance has said it is “closely monitoring” Ethereum’s upcoming “Merge” event and plans to assess potential fork tokens based on the support they receive.
  • With Ethereum’s move to Proof-of-Stake drawing nearer, some community members are planning to fork the blockchain to preserve a Proof-of-Work network.
  • Ethereum is expected to ship the Merge in mid-September, but the date has not yet been finalized.

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The Binance update comes as some members of the crypto community push to preserve a Proof-of-Work version of Ethereum following “the Merge.”

Binance May List Ethereum Forks 

The world’s biggest cryptocurrency exchange will support Ethereum’s landmark “Merge” event, and it may go as far as listing some Ethereum fork tokens. 

In a Wednesday blog post, Binance said it was “closely monitoring” the Merge and would support it on launch. The exchange noted that the event could potentially lead to the creation of some forked Ethereum tokens, adding that it would “evaluate the support for distribution and withdrawal of the forked tokens.” In other words, Binance has hinted that it plans to support the Proof-of-Stake version of ETH as the crucial update ships, but it hasn’t ruled out listing other ETH-related forked tokens. 

Ethereum’s so-called “Merge” update is widely considered to be one of the biggest crypto events in recent years. It will see the number one smart contract blockchain “merge” its current Proof-of-Work execution layer with a Proof-of-Stake consensus layer, moving the network onto a new consensus mechanism that relies on validators rather than miners. The upgrade, currently in testing and due to ship in mid-September, is expected to reduce Ethereum’s energy consumption by 99.9% and cut ETH issuance down by about 90% because the network will no longer need to pay miners to add new blocks to the chain. 

Support for Proof-of-Work Fork 

While the Ethereum community has widely supported the Merge, there has been some pushback over the impact it will have on miners. As a result, some notable names in the crypto community—TRON founder Justin Sun and established miner Chandler Gou among them—have backed a plan to fork the Ethereum blockchain to preserve a Proof-of-Work network. If a fork happens, it will likely lead to the creation of new ETH tokens, which is why Binance has said it will assess any potential new coins. 

Circle and Tether, the issuers of the USDC and USDT stablecoins, announced that they would exclusively support Proof-of-Stake Ethereum following the Merge yesterday. However, for exchanges in the business of making relevant assets available for trading, the Proof-of-Work Ethereum plans present a potentially lucrative opportunity. The Sun-backed Poloniex said it would support two potential hardfork tokens earlier this week, but so far none of the major exchanges has committed to listing any new tokens. 

Ethereum is due to complete its final Merge testnet early Thursday, with the date for the Merge on mainnet to be finalized sometime after. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

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