Coinbase Lists 4 Possible Risks Of Ethereum Merge


The Ethereum merger remains one of the most anticipated events in the crypto space. The upgrade was scheduled for September 15, 2022. It was the long-awaited transition of the blockchain as it moved from PoW to PoS. The change will result in the Beacon Chain and the Ethereum mainnet merging into one blockchain.

As an industry event, there have been many reactions and discussions regarding the merger. The Ethereum community is very hopeful that the transformation will be successful. For its part, the Ethereum development team has completed all the necessary checks and steps that will eventually activate the merger.

After the recent influx of activities related to preparing and waiting for consolidation, the reactions are intensifying. One of the world’s largest cryptocurrency exchanges, Coinbase, has made some shocking disclosures.

Coinbase Cloud has been identified Four potential risks with Ethereum integration. Operational, technical, lack of customer diversity and economic risks.

Potential Risks of Ethereum Merge

Building on the points highlighted, Coinbase has also provided some details about the risks.

Operational Risks: Remember that during Bellatrix, there was a decrease in the participation of contract operators and auditors. Some operators have not completed the upgrade for their customers. Also, there are some activities going on behind the scenes like test networks, client releases, last minute releases, etc.

According to a recent developer report, only 85% of nodes have completed the necessary and latest versions of the client. In addition, there are records of about 25% to 30% of validators who were unable to complete the Sepolia upgrade. It was thrown offline due to issues depending on the configuration.

Technical risks: Consolidation involves merging two different types of blockchain, the Ethereum mainnet and the Beacon Chain. While the first is based on PoW, the second is based on PoS. This makes the merge one of the most technically complex upgrades in the field of cryptography. Hence, it is highly vulnerable to bug attacks and other technical hurdles.

An example of the bug was tried with the upgrade of the implementation layer clients Nethermind and Go Ethereum (geth). However, the developer team has provided a helpful fix and potential guides to avoid redundancy.

Risks of Lack of Client Diversity: Once a client lacks diversity, it can lead to an increased risk of an approved client being dominant among others. This client may violate the consensus or even use its terms to suggest blocks.

Economic Risk: With the merger, miners will become irrelevant in the Ethereum blockchain as validators take over the block production process. Also, the type of GPUs for mining ether is different from that of BTC. Therefore, they can even switch to bitcoin mining. Their replacements will be on any available coins that are minable.

Coinbase Lists 4 Potential Risks for Ethereum Consolidation
Bitcoin falls on the chart of BTCUSDT on Tradingview.com

In addition, the fork of Ethereum PoW could create major issues with protocols and dApps on the blockchain.

Featured image from Pixabay, chart from TradingView.com





Leave a Comment

Your email address will not be published. Required fields are marked *