By
Benjamin Njiri
April 23rd, 2024
In resolving the potential favoritism that may be shown amongst the two Ethereum protocols in the future, Vitalik Buterin is proposing that the ecosystem should learn to adopt a wide range of stablecoins in order not to concentrate power on just a single protocol.
The Ethereum Foundation and community are now counting down to The Merge when the current Proof-of-Work (PoW) consensus mechanism and the projected Proof-of-Stake (PoS) will merge. There are many considerations with respect to the future of Ethereum moving forward as developers and key stakeholders in the community are bound to show favoritism to one protocol over another. Envisaging this challenge, Vitalik Buterin said that tilting the balance, especially for hard forks will be hinged on centralized stablecoins like the USDC and USDT.
Speaking at the BUIDL Asia Conference in Seoul, Vitalik explained that:
“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,” he added.
In plain terms, DApps can still choose to stick to the PoW-backed ETH network and he highlighted that unlike as it is today, there might be a new protocol like a centralized stablecoin that may have more sway in contentious hard forks in about a decade.
“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 said he did not believe the main Ethereum protocol will have such a challenge as he believes that centralized stablecoins will only have sway over future hard forks. A hardfork occurs when there is a drastic change in the code of a major blockchain network, resulting in the creation of two separate networks.
One of the most popular hard forks that the Ethereum Network has witnessed is that which birthed Ethereum Classic, a new layer-1 protocol with its own robust ecosystem.
Vitalik Buterin’s Proposed Solution
In resolving the potential favoritism that may be shown amongst the two Ethereum protocols in the future, Vitalik Buterin is proposing that the ecosystem should learn to adopt a wide range of stablecoins, including USDC, in order not to concentrate power on just a single protocol.
“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,” he said.
With September 19 agreed as the date for the Merge, the mining process on the PoW protocol will also be more difficult, a move that will largely discourage its usage post The Merge.