Ethereum co-founder Vitalik Buterin said that centralized stablecoins such as Tether (USDT) and Circle USD (USDC) could become "controversial hardware in the future"Important determinants of forks".
On August 3rd, Buterin discussed the upcoming merger of Ethereum with Near Protocol co-founder Illia Polosukhin at the BUIDL Asia conference in Seoul.
The Ethereum co-founder believes that centralized stablecoins may be “important” for the industry to “maintain” which blockchain protocol in a hard fork"determining factors.
A hard fork occurs when the protocol of a blockchain network changes radically and effectively produces two versions.Often, one chain ends up being more popular than the other.
"At the moment of merger, there will be two (separate) networks... and then there will be exchanges, there will be oracle providers, there will be stablecoin providersproviders, and they somehow decide which network to maintain."
Buterin explained: “Because by then, there will be $100 billion in USDT on one chain and $100 billion in USDT on the other chain, so, they (Tether) need to stop maintaining one of the chains.”
However, Buterin said he "sees no indication" that such an argument would be a problem in Ethereum's upcoming merger, noting that the centerThe issue of stablecoins is even more a problem of future hard forks.
"I think it will definitely be a more worrying issue in the further future. Basically, USDC decides which chain to consider asThe fact of Ethereum could be an important determinant of future contentious hard forks.”
He added that in the next five to ten years, Ethereum could see more contentious hard forks, with centralized stablecoin providersmay have more weight.
He said: "By then, maybe the Ethereum Foundation will be weaker, maybe the ETH 2 client team will have more power, maybe something like CoinbaseSuch a company, both running the stablecoin and acquiring one of the client teams, […] a lot of that could happen.”
Vitalik recommends choosing different kinds of stablecoins to counter the potential means of centralized players:
"The best answer I can think of is to encourage adoption of a wider variety of stablecoins. Basically, people may use USDC, but they may also useDAI, at this point, I mean, DAI has taken this very decisive line of saying, 'We're not going to be a pure crypto-economy, we're going to be a wrapper around a multitude of real-world assets.'"
The merger is one of the most critical technical updates to happen to Ethereum since its inception, as it will move from proof-of-work (PoW) to a Proof of Stake (PoS) consensus mechanism.
The merger is planned to continue following the successful integration of the Goerli testnet in mid-August, with Ethereum developers setting September 19 as the final date for the current merger.