Although the developers of Ethereum promised that there would be no downtime during The Merge, one of the most anticipated updates of Ethereum, members of the cryptocurrency community decided to take proactive measures to ensure the safety of investor funds. In this effort, cryptocurrency exchange FTX announced that it would halt Ether (ETH) transactions on secondary blockchains until the September upgrade is complete.
Shortly after the announcement, FTX deleted the tweet, while CEO Sam Bankman-Fried clarified that “ETH trading will remain active during The Merge.”
Official tweet from FTX (left) confirming the temporary deactivation of the ETH transfer. Source: Google Cache
The Merge update will permanently transition the Ethereum blockchain from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) consensus mechanism, with the goal of reducing power consumption and introducing sharding capabilities.
According to the Ethereum developers, Merge is designed to transition to PoS with zero downtime due to Total Terminal Difficulty (TTD), which will ensure the transition based on the total mining power that goes into building a chain. Despite the explanation, FTX chose to suspend “deposits and withdrawals until the update (Merge) is finished and the networks are stable.”
The suspension of Ethereum deposits and withdrawals on various blockchains has been scheduled to begin at different times, but remains subject to change based on anticipated complications.
The official FTX deadlines for stopping ETH deposits and withdrawals. Source: FTX
FTX also noted that it is not responsible for any losses in the event of large price fluctuations, adding that “it is the user’s responsibility to understand the implications of this announcement.”
Clearing up one of the biggest misunderstandings related to The Merge, the Ethereum Foundation clarified that the upcoming upgrade will not reduce gas fees. The official statement reads thus:
“Gas rates are a product of network demand relative to network capacity. The Fusion depreciates the use of proof-of-work, transitioning to proof-of-stake for consensus, but not does not significantly change any parameter that directly influences network capacity or performance.”
Instead, the update is intended to purely remove the need for energy-intensive mining.
Disclaimer: FTX has removed the tweet from the source and updated the blog post that was the basis of the initial story. This article has been updated based on new official information to confirm that FTX will suspend ETH deposits and withdrawals, and will not stop trading on the exchange.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.