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HomeUncategorizedWhy Coinbase Might Be an Ethereum Merger Problem?

Why Coinbase Might Be an Ethereum Merger Problem?

With the release of Bellatrix and mainnet updates for the ETH 2.0 client, the Ethereum merger officially begins. Ethereum 2.0 client Teku released the required update v22.8.1 for all mainnet users in preparation for the merger. Essentially, an update consists of a Bellatrix upgrade and merged transition configuration.

All Ethereum mainnet users have until September 6th to upgrade to the newer version, which is the date Bellatrix is ​​activated on mainnet.

Finally, after multiple delays, the Ethereum merger is closer than ever – originally scheduled for September 15th.

Coinbase could play a huge role after Ethereum merger!

Ran Neuner, CNBC crypto trader and founder of Crypto Banter, believes Coinbase has a big role to play in the combined Ethereum ecosystem. According to Neuner, Coinbase will be one of the largest validators in Ethereum 2.0.

Ethereum will transition from a proof-of-work-based consensus mechanism to a proof-of-stake mechanism, in an effort to reduce energy consumption and the carbon footprint generated by traditional PoW mechanisms.

Basically, Proof of Stake relies on validators to validate transactions to keep the system running. Validators should stake a certain amount of native tokens they hold. However, due to the dishonest behavior of the validators, the stake will be slashed.

According to Neuner, Coinbase has a large amount of Ethereum assets, and as such, it will be one of the largest sources of validators.

Several others hold the same view. JPMorgan analyst Kenneth Worthington revealed that cryptocurrency exchanges will be an important beneficiary of the merger. According to his estimates, Coinbase owns about 15% of the ethereum asset.

Will Coinbase Dependency Hurt Ethereum?

Issues may surface due to possible legal consequences of Tornado Cash sanctions. Neuner believes that Coinbase will allow institutions to stake Ethereum, and thus, they will become validators of transactions. He expressed skepticism and questioned what would happen if transactions were made through Tornado Cash.

According to Neuner, transactions verified by Coinbase may be subject to oversight by the Office of Foreign Assets Control (OFAC), a division of the U.S. Treasury Department that approved Tornado Cash. Furthermore, he believes that if Coinbase refuses to validate such transactions, ethereum will end up being worthless.

Ethereum 2.0 has been attacked due to potential centralization and censorship issues.

Ethereum client Teku released an upgrade to support ETH 2.0 Merge

On August 22, Ethereum 2.0 client Teku disclosed the release of v22.8.1, a necessary update to prepare the market for the September 6 Bellatrix upgrade and eventual merger.

Requires mainnet nodes to upgrade Teku and execute clients in preparation for the merger. If the upgrade execution client fails, Teku will report “Merge Transform Configuration Error”. A local Terminal Total Difficulty (TTD) and Terminal Block Hash that does not match the Remote Execution Client value will disapprove the transition on the mainnet node. Obviously, upgrading to a newer version has become a requirement to avoid any inconvenience.

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