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Right after USD Coin (USDC) issuer Circle Pay made an official announcement, stablecoin giant Tether also made an official announcement that it will support Ethereum's upcoming Merge upgrade and switch to a blockchain based on proof-of-stake (PoS).
The announcement came on the same day as a stablecoin competitor's promise to only support Ethereum's long-awaited update.
In a statement released on Tuesday, Tether called the Merge one of the "most important moments in blockchain history" and said that it will work according to the schedule for Ethereum's upgrade, which is currently set to happen on Sept. 19:
"Tether thinks that it's important that the transition to POS not be used as a weapon to cause confusion and harm in the ecosystem, especially when our tokens are used in DeFi projects and platforms."
"Tether will keep a close eye on how this event is coming together and will support POS Ethereum according to the official plan." We think that a smooth transition is important for the long-term health of the DeFi ecosystem and its platforms, including those that use our tokens," Tether said.
Even though the official statement didn't come out until today, the stablecoin issuer's chief technology officer Paolo Ardoino said in July that they planned to support Eth2 after the Merge.
He didn't outright say he would support PoS/ETH2 by default - it looks like he will support the chain that will lead to more stability and avoid disruptions. Granted, this will probably still end up being ETH2, but I think it slightly shifts the odds in Galois's favour.
— FatMan (@FatManTerra) July 31, 2022
According to CoinGecko, Tether (USDT) is the largest stablecoin in crypto right now, with a market cap of $66.6 billion. USDC is not far behind, with a market cap of $54.1 billion. At the time of writing, a large amount of both stablecoins' supply is on Ethereum's current proof-of-work (PoW) blockchain, with USDT at $32.3 billion and USDC at $45.1 billion.
Given the size and dominance of these stablecoins in the stablecoin market, this show of support should help the Ethereum, Tether, and USD Coin ecosystems, as well as the crypto market as a whole, make a smooth transition.
Vitalik Buterin, the co-founder of Ethereum, recently warned that their power could cause problems in future hard forks of Ethereum, because centralized entities like Tether and Circle could choose to use the forked chain that works best for them instead of what the Ethereum community has suggested.
"I think that will definitely become more of a problem in the long run. Basically, he said, "USDC's choice of which chain to count as Ethereum could be a big factor in future hard forks where there is a lot of disagreement."
Stablecoin issuers (Circle/Tether) control fork choice in Ethereum.
— Brandon Quittem (@Bquittem) August 6, 2022
What happens when the state pressures Circle to support a fork that goes against “eth community social contract?” https://t.co/dP7ZPFiJ0u
This week, Ethereum will do its final Merge test on the Goerli testnet. If everything goes as planned, the Merge date of September 19 is not likely to be moved.
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