Coinbase Lists 4 Possible Ethereum Merger Risks

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

As an event in the industry, several reactions and discussions have arisen around the merger. The Ethereum community has high hopes that the transition will be successful. For its part, the Ethereum development team has completed all necessary checks and steps that will finally enable the merger.

After the latest flurry of activities in preparation and anticipation of the merger, the reactions are intense. One of the world’s leading crypto exchanges, Coinbase, has made a shocking revelation.

Coinbase Cloud had identified four possible risks with the Ethereum merger. The risk is operational, technical, lack of customer diversity and financial.

Potential Risks of Ethereum Merging

Based on the highlighted points, Coinbase also offered some details about the risks.

Operational risks: Remember that during Bellatrix there was a drop in the participation of node operators and validators. Some of the operators did not complete the upgrade for their clients. There are also some behind-the-scenes activities such as testnets, client releases, last-minute releases and others.

According to a recent developer report, only 85% of nodes have completed the required and latest client releases. Additionally, there are records of around 25% to 30% of validators who could not complete the Sepolia upgrade. They were thrown offline due to configuration issues.

Technical risk: The merger involves the merging of two different blockchains, the Ethereum network and the Beacon chain. While the first is based on PoW, the second is based on PoS. This makes Merge one of the most technically complex upgrades in the crypto space. Therefore, it is highly susceptible to bug attacks and other technical problems.

An instance of the bugs was experienced with the upgrade of the execution layer clients Nethermind and Go Ethereum (geth). However, the development team provided a practical solution and possible guidelines to avoid repetition.

Risk of lack of customer diversity: When a client lacks diversity, it can increase the risk of a consensus client becoming dominant among others. Such a client can violate the consensus or even use the terms to propose blocks.

Financial risk: With the merger, miners will become irrelevant on the Ethereum blockchain as validators take over block production. Also the type of GPUs for mining Ether is different from that for BTC. So they can even switch to Bitcoin mining. Their options will be on all available mineable coins.

Bitcoin is falling on the l BTCUSDT chart on Tradingview.com

In addition, the Ethereum PoW fork could create significant problems with protocols and dApps on the blockchain.

Featured image from Pixabay, chart from TradingView.com

Leave a Reply

Your email address will not be published.