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Ethereum merge is coming soon. What could go wrong?

Five years of waiting, years of delay, praised, criticized, tweaked, developers say it’s done.

Ready or not, Ethereum’s long-awaited integration is here. But given that it’s a technical feat, is there a danger that something could go terribly wrong?

Merge — Ethereum Migration proof of work to the system Proof of Stake— set to occur From September 10th to September 20thDuring this historic upgrade to the second largest cryptocurrency by market capitalization, Over half of all decentralized financial activity is builtcould you run out of funds or NFTs or your favorite apps stop working?

The developers say nothing to worry about. We are confident that the integration will not affect the security of our assets or the functionality of our apps. As we look ahead to the months and years to come, the implications of the merger could have long-term political and even legal implications.

“My only advice is to do nothing”

One of the rumored merge-related risks that has been gaining momentum in recent weeks concerns so-called replay attacks.

because, Campaign to Fork or Split Ethereum Appears If you keep an alternate proof-of-work version of the network, all digital assets currently being built ethereum Merge will duplicate. The “real” versions of NFTs and stablecoins will exist in the merged Proof of Stake Ethereum network, but copies of those assets, if materialized, will also exist in the new forked Proof of Work network. increase.

These copies can be worth much less than legitimate tokens on the Ethereum network, but owners of these assets are tempted to sell these surplus tokens for a meager payday. may be driven.

However, replay attacks can allow malicious individuals to clone these transactions to steal a more valuable and authentic version of real Ethereum assets. blockchainShortly after a relatively worthless “copied” asset is sold on the forked chain, in theory, hackers can replicate the transaction on Ethereum, creating a seemingly authentic record of the fake transaction. can trick the blockchain.

However, such an attack can only occur if both the “real” asset on the Ethereum blockchain and the “copied” asset on the forked chain have the same chain ID. . And for this very reason, there is no viable fork of Ethereum that copies the Ethereum chain ID.

ETHPoW founder Chandler Guo is by far the Most prominent campaign to fork Ethereum during merge-Confirmed Decryption His proposed network changes all chain IDs on the blockchain to prevent such attacks.

Ethereum core developer Marius van der Weyden said, “There will be no problem with replay attacks.” Decryption.

However, this does not rule out the possibility of scammers preying on users who are unaware of the actual asset they are selling (genuine or a copy).

“[A scammer could] “Hey, you have money on this chain. Throw it away and sell it to us. And we’ll give you a lot of money,” said Van der Wyden. “And actually you are trading on the mainnet and he on the mainnet is selling Ether. You can run into a teacher,” he said.

So Terence Tsao, another Ethereum core developer, has just one piece of urgent advice for users concerned about such scenarios.

“My only advice is to do nothing,” he said. Decryption.

It takes about 12 minutes for the merge to complete. Meanwhile, a number of major cryptocurrency exchanges have announced plans to merge. Suspension of deposits and withdrawals For Ethereum and Ethereum-based tokens. This is perfectly normal and no user funds are at risk during this time.

“Funds are not in jeopardy,” van der Wyden said. “I myself, in that 12 minutes of him he’s not going to transfer $100 million. But after 12 minutes the chain will end. Then everything should be fine. I can.”

During this 12-minute period, about 150 Ethereum developers are on high alert, looking for bugs in the merge’s software. These bugs are fixed as soon as they are discovered and do not affect the security of users’ assets, only the speed of transactions.

In a worst-case scenario, such a bug could cause transaction delays of “up to 5-10 minutes,” Tsao said. “But once it goes smooth, it just goes smooth.”

Politics of ETH

Technical risks may be relatively insignificant, but the long-term political and legal issues raised by the merger are not so easily dismissed. Ethereum is set to undergo a fundamental change, and while the impact of that change may not be immediately apparent, it all boils down to how his new ETH will be issued and who will be the most influential on the network. It depends on whether you will have

By moving Ethereum from Proof of Work to Proof of Stake, the merge will change how new ETH is created. Currently, new ETH is generated through an energy-intensive “mining” process. In mining, an individual directs vast amounts of computer power to solve a difficult puzzle and is rewarded with new blocks of ETH. However, after the merger, new ETH will be generated by “staking”. Stakers pledge large amounts of existing ETH to create and earn new ETH.

Mining required dedicated hardware and access to large amounts of electricity. Staking requires access to capital. As such, most major cryptocurrency exchanges are lining up to participate in ETH staking. Like Coinbase, Declares that it is betting its future on a staking serviceThis move makes sense. The more capital a company pledges, the higher the yield. Exchanges like Coinbase can make much more profit than individual stakers by pledging a user’s ETH.

Large centralized companies already provide more than 66% of all staked ETH, according to data compiled in . Dune analysis dashboard, and data from research firm Nansen. This means companies like Lido, Coinbase, Kraken and Binance will be responsible for verifying the majority of transactions on the combined Ethereum network.

And within the crypto ecosystem, which places high value on decentralization and privacy, that fact is not accepted by many.

But beyond theoretical debates about the role centralized firms should play in operating the mechanisms that underlie most of decentralized finance, very real tests of that relationship may soon emerge. not.

When the U.S. Treasury Department Licenses Crypto-Mixing Tools to Enhance Privacy tornado cache Last month, the company blacklisted a number of wallet addresses associated with its products, effectively declaring cooperation with these addresses tantamount to a crime supporting the North Korean government.

event that triggered countless meaningsfor example, would someone verifying a block of Ethereum transactions, including transactions from blacklisted addresses, commit a crime?

With the majority of Ethereum transactions soon to be verified by a handful of large companies with a large presence in the US, this tension could quickly reach its peak. Coinbase CEO recently mentioned If forced to censor blocks, he would take his company out of the staking business. I can’t.

Ethereum core developers, on the other hand, are adamantly opposed to validators censoring Ethereum transactions.

“We will monitor these companies to see how they are doing,” said Ethereum core developer Cao. “If they behave maliciously, we can force them out through social governance.”

Cao elaborated that block censorship would be considered malicious activity by Ethereum’s core developers.

But many questions still remain. What happens when the Ethereum network launches an entity responsible for verifying the vast majority of Ethereum transactions? It leads to another controversial fork: a split between corporate compliant ETH and censorship-resistant ETH. Is it possible? And what happens to the ETH that users have staked through the exchange if the exchange is penalized or banned from staking?

“I don’t know. I don’t know,” Cao said. “This is a very complicated question.”

Billions of dollars may be at stake in that answer.

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