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Ethereum Mining & PoS Activities Are ‘Prohibited’ Says Blockchain Data Service Provider

2 mins
Updated by Ryan James
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In Brief

  • The upcoming Merge has contributed to a rise in Ethereum investment products.
  • It's possible that the Ethereum hard fork will have a detrimental influence on stablecoins and DeFi protocols.
  • Tether and Circle have now confirmed their support for the Ethereum PoS hard fork.
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As Ethereum (ETH) approaches the Merge, the debate over its shift to a proof-of-stake (PoS) network appears to be growing. Many people have expressed their worries regarding the current centralization of Ethereum’s validator nodes, claiming that moving to a PoS system would worsen matters.

This has led to rising concerns among crypto investors that the current proof-of-work (PoW) system might not be as secure as it should be, and that a switch to PoS would mean that a single entity could, with a possibility of 51%, attack the network.

For years, the switch to proof of stake for Ethereum has been delayed. “We thought it would take one year to put POS in place, but it’s taken approximately six years,” Ethereum co-founder Vitalik Buterin stated

According to a tweet by Maggie Love, the co-founder of Web Cloud, “Ethereum cannot be decentralized if the stack is not decentralized.” She points out the 69% of nodes that are hosted on the ETH mainnet, “with over 50% of that coming from Amazon Web Services (AWS), over 15% from Hetzner, and 4.1% from OVH.”

In anticipation of the upcoming Merge, various platforms that use the Ethereum blockchain have announced their contingency plans. Under the PoS system, crypto investors stake a specific quantity of their cryptocurrency on the standard network, rather than utilizing big amounts of electricity to generate more cryptocurrency.

Ethereum Merge on the stablecoin

Even if none of these issues come up, the future of stablecoins still represents a major challenge for the decentralized finance (DeFi) sector. With centralized stablecoins dominating decentralized protocols, many DeFi projects have been considering algorithmic stablecoins. But there are still potential regulations for stablecoins that could impact DeFi after the Ethereum merge.

The stablecoin market is huge, with more than a $100 billion market cap, and its use on public blockchains like Ethereum has grown significantly, making them integral to DeFi operations. But as the Ethereum network approaches the merge, the stability of these assets becomes more important than ever.

The Ethereum Merge, set for September 15th, could possibly affect the stability of digital assets that are pegged to real-world currencies. Most DeFi applications could be hosted on the Ethereum blockchain after it switches from its current PoW consensus mechanism to PoS. The upcoming Ethereum fork to replace the PoW consensus system with a PoS one is expected to speed up the development of Ethereum toward institutional-grade investment.

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In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.

Wahid Pessarlay
Wahid loves to write, especially about Crypto and Blockchain. He started his blogging journey in 2017 and turned to crypto in 2019. Wahid is interested in tech, chess and DeFi. He...