Several Web3 platforms operating on the Ethereum blockchain have announced contingency plans ahead of the anticipated Merge next month.
After years of development and community support, Ethereum will finally transition from the proof-of-work (PoW) validation mechanism, the process behind energy-intensive cryptocurrency mining.
Following countless trials, the blockchain will merge next month with the Beacon Chain, after which it will operate using the proof-of-stake method.
Under the proof-of-stake method, crypto investors stake a certain amount of their crypto on the shared network, rather than using industrial amounts of commuting power to effectively generate more cryptocurrency.
Supporting the network in this way enfranchises stakers with participation in a lottery to verify an exchange and receive new coins.
Yet, despite all preparations, the integration remains an unprecedented risk, as a botched Merge could compromise thousands of projects and trigger a market crash. “Essentially, they’re changing the engines out in flight,” said crypto venture investor Christopher Calicott. “Nothing has ever been attempted at this scale.” Consequently, several Web3 platforms are making necessary preparations.
Merge contingency plans
For instance, decentralized finance protocol Aave suspended Ethereum lending in anticipation of the Merge, which it explained in a post on its governance site.
The DeFi lending market reasoned that since “most tokens, excluding ETH, will likely be worthless on an ETHPoW chain… one strategy users may employ to maximize their crypto-asset holdings will likely be to borrow as much ETH as possible.”
Another concern referenced here are potential PoW Ethereum forks, that do not upgrade to PoS validation. Although the prevalence of centralized stablecoins, DeFi, and cross-chain bridges in the Ethereum ecosystem make such prospects much more complicated now, it nonetheless remains an issue.
For example, Ethereum-based non-fungible token (NFT) marketplace LooksRare.org laid out its risk mitigation policy in the event of such a chain split. Shortly before the merge occurs, LooksRare.org said it would go into “maintenance mode,” disabling support for WETH, thus negating any risk that orders could be replayed once the Merge is completed.
Following the completion of the Merge, “multi-sig operators will confirm that the POW fork is no longer using ChainID 1… [and] will update Currency Manager on the POS chain,” re-enabling support for WETH.
Merge data challenge
Meanwhile, the Ethereum Foundation has solicited the efforts of data analysts in helping to facilitate the upcoming Merge. The Foundation is offering $30,000 in prizes for data analyses and visualizations of the copious amount that the integration is certain to generate.
According to the announcement, the challenge is open to anyone willing to collect and analyze Merge data. In addition to seeking out information about how the integration affected key metrics, such as changes in network performance or user engagement, the Foundation is also hoping participants provide new approaches to tools and visualization.
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