Neither USDT nor USDC will be backed by reserves in a potential Ethereum Proof-of-Work fork, Tether and Circle announced today. The potential Ethereum Proof-of-Work fork fails to gain support.
Tether and Circle, the two largest centralized stablecoin issuers in the crypto space, both announced today that they would support Ethereum’s transition to Proof-of-Stake and not a potential Proof-of-Work fork.
Tether stated in on its blog that Ethereum’s transition to Proof-of-Stake should not be “militarized“and disrupt decentralized finance (DeFi) protocols, centralized platforms and the crypto community as a whole. Circle said that, regardless of Ethereum’s forks, its USDCs could not “exist only as a single valid “version”” and that the company fully supported Ethereum’s move to Proof-of-Stake.
Ethereum is set to change its consensus algorithm from Proof-of-Work to Proof-of-Stake, a highly anticipated transition known in the crypto community as “the merge.” Upon completion of the merge, Proof-of-Work miners will become obsolete as consensus will be achieved by a different set of network participants called validators. This recently led prominent figures in the Chinese mining community to declare that they would fork Ethereum to keep a Proof-of-Work version running, even after the blockchain officially switches to Proof-of-Stake. Tron founder Justin Sun said he would support such a plan.
Tether and Circle’s decision to support Ethereum’s future Proof-of-Stake chain instead of a potential Proof-of-Work chain casts doubt on the long-term viability of the miner-led initiative, as neither USDT nor USDC on the Proof-of-Work chain will be backed by reserves. And while crypto-currency exchanges BitMEX and Poloniex have already listed a token for the Proof-of-Work (ETHW) chain, interest in it has been low. so far.