Will we get a Merge, Surge, Verge, Purge, and Splurge? Or will we simply Diverge?
The chatter lately is about what happens if Ethereum forks into a Proof of Work vs Proof of Stake chain around the time of the merge?
This has protocols weighing in with analyses of their risks should a viable fork occur, often with DAOs announcing support for a chain, (overwhelmingly the PoS one).
In the case of Curve, the protocol announced it had zero choice in the matter.
In fact, Curve made the contentious announcement that major stablecoin issuers like USDC and USDT are in control of Ethereum.
Some people tried to dispute the point. A good rule of life is that if you find yourself in the position of a reply troll arguing against several of the biggest brains in the room, you might want to step back a minute and rethink.
Fellow big brain Sam K. also echoed the sentiment that stablecoin kingpins have outsized power in the decision.
The mechanics are not a complicated thought experiment. Imagine I have issued $1MM in stablecoins on a chain backed by $1MM USD. If this chain forks, then 1MM tokens exist on both chains, for a total of 2MM tokens.
Yet the fork didnโt magically double the number of dollars underlying these tokens. All 2MM tokens cannot suddenly be redeemed at parity, since only $1MM USD exists to back these. Either the tokens can only be redeemable on one chain, or their value on each chain is roughly sliced in half.
For the anxious types, weโll spoil the punchline upfront. Donโt bet on any drama around the upcoming merge. We agree with the consensus opinion that stablecoins will overwhelmingly select the PoS chain as the canonical fork. The PoW chain will need to begin issuing stablecoins from scratch if they want any meaningful adoption.
While it will be fun to see light world versus the dark mirror universe play out in realtime, thereโs plenty of questions for armchair philosophers. What does this mean for the โdecentralizationโ of Ethereum if stablecoin issuers have such power? Could a more contentious fork become an existential threat to DeFi, or finally cause the much anticipated Curve death spiral? What about the poor NFT collectors?
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