Vitalik Buterin Says Centralized Stablecoins Like USDC and USDT Will Become Decisive in Future Hard Forks

Vitalik Buterin Says Centralized Stablecoins Like USDC and USDT Will Become Decisive in Future Hard Forks

The co-founder of Ethereum, Vitalik Buterin says that centralized stablecoins, such as Tether (USDT) and USD Coin (USDC), could become “a decisive factor in future and controversial hard forks”.

Buterin spoke at the BUIDL Asia conference in Seoul on Wednesday, along with Illia Polosukhin, the co-founder of Near Protocol, to discuss the ethereum mergerwhich is about to unfold.

The co-founder of Ethereum argued that centralized stablecoins could be a “significant” decision on which blockchain protocol the industry will “respect” on hard forks.

A hard fork occurs when there is a radical change in the protocol of a blockchain network that results in two versions. Typically, one string ends up being preferred over another:

“At the time of the merge, you will have two networks [separadas] […] and then there will be exchanges, oracle providers, stablecoin providers that will be sort of deciding which one to honor.”

“Because at that point, you’ll have 100 billion USDT on one chain and 100 billion USDT on the other chain, cryptographically, and so they [Tether] need to stop respecting one of them,” explained Buterin.

Nevertheless, Buterin stated that he “hadn’t seen any indication” that such contention was going to be an issue in the Ethereum merger, noting that the centralized stablecoin issue is more of a concern for future hard forks..

“I think in the further future that will definitely become a bigger concern. Basically, the fact that USDC’s decision of which chain to consider as Ethereum could become a deciding factor in future controversial hard forks.”

He added that in the next five to ten years, there could be more contentious Ethereum hard forks in which centralized stablecoin providers could have more say.

“At that point, maybe the Ethereum Foundation will be weaker, maybe the ETH 2 client teams will have more power, and maybe someone like Coinbase would both run a stablecoin and buy one of the client teams by then. […] A lot of those kinds of things could happen,” he said.

Read:  Terra USD and 9 other stablecoins that have lost their parity in history

As a potential antidote to centralized players, Vitalik proposed opting for different types of stablecoins.:

“The best answer I can think of is to encourage the adoption of more types of stablecoins. Basically, you know, people could use USDC, but they could also use DAI and how, at this point, I mean, how has DAI taken this type very decisive route of saying ‘we’re not going to be purely crypto, we’re going to be a wrapper for a bunch of real-world assets.'”

The merger is one of the biggest technical upgrades to come to Ethereum since its inceptionas it moves from a Proof-of-work (PoW) consensus mechanism to a Proof-of-Stake (PoS) one.

The merger is scheduled to take place following the successful integration of the Goerli testnet in mid-August.. Ethereum developers are targeting September 19 as the perpetual date for the merger of the current PoW chain with the PoS chain.

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