Vitalik Buterin says centralized stablecoins could decide the future of Ethereum hard forks

By August 5, 2022DeFi
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The co-founder of the Ethereum blockchain, Vitalik Buterin, has said that centralized stablecoins like Tether (USDT) and USD Coin (USDC) could become an integral piece in future decision-making about contentious hard forks.

Centralized stablecoins could decide the future of hard forks

Buterin was giving a speech at the BUIDL Asia Conference in Seoul on Wednesday, discussing the eagerly-awaited Ethereum merge. The Ethereum co-founder said that centralized stablecoins could help the industry to choose the hard forks they respect.

A hard fork is a process that brings a significant change to a blockchain’s protocol, creating two versions of that network. In the end, the community prefers one chain to the other. He added that at the time of the Merge, there would be two separate networks, and exchanges, oracle providers, and stablecoin issuers would have to choose between the two.

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However, he ascertained that there were no signs that such contentious issues would be seen with the upcoming Merge, adding that the problem with centralized stablecoins was a concern about future hard forks. According to Buterin, the next five to ten years could see more contentious hard forks where stablecoin issuers have more power over decision-making.

Buterin alluded that if such a scenario was reached, several factors could have changed, such as the Ethereum Foundation growing weaker, the ETH 2.0 client teams having more power, or organizations like Coinbase launching a stablecoin.

Buterin also has a solution to control centralization in the stablecoin space. He mentioned that the best solution for centralized players in the sector was having different stablecoins.

Buterin said that there needed to be a rise in adopting different stablecoins. He provided the example of Circle’s USDC and MakerDAO’s DAI, saying that the DAI stablecoin had taken another path of not being entirely focused on the crypto economy but also on a network where the crypto community could access a wide range of other real-world assets.

The Ethereum Merge

Ethereum is the king of decentralized finance (DeFi) and is home to some of the largest DeFi lending platforms. However, over the years, Ethereum users have faced the issue of high gas fees and slow speeds on the network. The energy consumption of Ethereum’s proof-of-work consensus has also been a contentious issue.

To solve these issues, Ethereum is switching to a proof-of-stake consensus through a process known as The Merge. Ethereum developers have provided September 19 as the tentative date for The Merge. The Merge will happen after the successful integration of the Goerli testnet. The testnet is expected to go live in mid-August. Ethereum developers have conducted several testnets that have successfully switched Ethereum to PoS.

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