How will the Ethereum integration upgrade affect stablecoins and DeFi protocols?
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Answer How will the Ethereum integration upgrade affect stablecoins and DeFi protocols?
According to speakThe stablecoin market is huge, and its use on public blockchains like Ethereum has grown exponentially, making the Ethereum network an integral part of DeFi.
The report indicated that the Ethereum integration upgrade could affect the stability of the stablecoin as it hosts the majority of DeFi applications.
The merger, scheduled for September 15, will see the Ethereum blockchain transition from a PoW mining consensus mechanism to a PoS stake.
Major stablecoin issuers such as USDT and USDC have revealed their support for the merger.
However, some community members still have concerns about this planned upgrade.
MakerDAO and Ethereum Merge Concerns:
MakerDAO, which is behind the digital stablecoin DAI, which is one of the largest decentralized stablecoins built on Ethereum, has highlighted the many problems that can come with integrating Ethereum.Read:Facebook official: We don’t know who will use Libra cryptocurrency
Some of the problems identified include:
Negative funding, permanent contract rollback, network downtime, reboot attacks…etc.
Additionally, cryptocurrency investment firm Grayscale has also expressed concerns that the merger could affect ERC-20 digital tokens.
This is especially possible if there are other splits, which is likely to happen.
According to Grayscale, the merger could cause a situation where digital tokens locked into smart contracts could be locked forever, forcing their holders to start filtering their tokens before the merger.
But it seems that the developers of Ethereum have taken into account all these possibilities and made provisions for them.
There is a strong belief that the merge will not affect the network because it will happen on the base layer.
Also, most DeFi protocols don’t care about these potential problems either.
Uniswap, for example, has been told that its service will not be interrupted due to the integration upgrade.
Even if none of the mentioned problems arise, the future of stablecoins remains a huge challenge for the decentralized finance sector.Read:The digital currency “Shiba Inu” reaches a new peak and records a monthly return on investment of 850%!
With the dominance of centralized stablecoins over decentralized protocols, many DeFi projects have considered cryptocurrency stablecoins, according to the report.
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