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News Report

Stablecoin Giants Circle, Tether Support Ethereum in Its Upcoming PoS Transition

3 mins
Updated by Ryan James

In Brief

  • Tether and Circle have extended their support to Ethereum as it approaches The Merge.
  • Circle has also distanced itself from other versions or forks of Ethereum post Merge.
  • The statements come soon after divergent views on the likelihood for a hard fork emerged.
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Issuers of the two largest stablecoins – Tether’s USDT and Circle’s USDC— have extended their support to Ethereum as it approaches The Merge in September this year.

Tether feels that it’s crucial that the move to proof-of-stake (PoS) not be used as a weapon to cause confusion and harm within the ecosystem, especially when the community widely uses USDT tokens in DeFi projects and platforms.

It further added, “For this reason Tether will closely follow the progress and preparations for this event and will support POS Ethereum in line with the official schedule. We believe that a smooth transition is essential for the long-term health of the DeFi ecosystem and its platforms, including those using our tokens.”

Meanwhile, Circle has stated that they are thrilled about the prospects for future scalability and the network’s lower energy usage profile as Ethereum draws closer to “The Merge” event.

“USDC is the largest dollar-backed stablecoin issued on Ethereum and, as the issuer of USDC, Circle intends to fully and solely support the Ethereum proof-of-stake (PoS) chain post-merge,” Circle underlined in its blog post.

The Merge supported by the largest stablecoin issuers

According to CoinMarketCap, USDT has a market cap of over $66.5 billion at the time of writing while USDC holds close to $54 billion, making them strong backers of the PoS transition.

The support also comes as Tether believes that as the most used stablecoin on the Ethereum blockchain, ‘it is their responsibility to reassure the community of their support for its development.’

That said, Circle stated that as “the largest dollar-backed stablecoin issued on Ethereum” and “the largest ERC-20 asset overall” it is a core building block for DeFi innovations on Ethereum. In addition, the issuer assures that it does not anticipate disruptions to USDC’s on-chain capabilities or to its issuance and redemption services as a result of its support of the event.

With that, Circle has also distanced itself from other versions or forks of Ethereum, stating, “While we don’t speculate on the possibility of forks post Ethereum Mainnet merge, USDC as an Ethereum asset can only exist as a single valid “version,” and as stated previously, our sole plan is to fully support the upgraded Ethereum PoS chain,” Joao Reginatto, vice president of product at Circle, said in its blog.

Earlier, Chainlink had also stated that it will not support any proof-of-work Ethereum forks following Ethereum’s conversion to proof-of-stake. The statement comes soon after divergent views on the likelihood for a fork post the Ethereum Merge created factions within the community.

Hard fork supporters could be disappointed

Be[In]Crypto had also previously pointed out how analysts have warned against forks created for short-term goals without regard for how the network will be supported in the long run.

On DeFillama, Ethereum continues to be the top chain dominating around 58% of the total value locked (TVL) on decentralized finance, worth around $38.57 billion. It houses 531 protocols at the time of writing, closely followed by Binance Smart Chain (BNB) with 440 protocols.

Meanwhile, Bloomberg Intelligence also predicts accelerated institutional-grade investment post-Merge. And with six consecutive weeks of inflows in digital assets, CoinShares’ latest report also found that  Ethereum-based products saw the vast majority of these inflows amounting to $16 million.

According to the report, more clarity on the timeframe of The Merge, during which the protocol will switch from proof-of-work to proof-of-stake, is responsible for the improvement in investor mood.

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