Coinbase To Pause Ethereum (ETH) Deposits & Withdrawals During The Merge

08/17/2022

2 minutes read

2022.08.17 23:06

As the top players of the crypto game are eagerly waiting for ‘The Merge’, the largest American crypto exchange, Coinbase (NASDAQ:COIN), has announced their plans for the switch to ETH 2.0, or more popularly known as ‘The Merge’, which will go live on Ethereum’s (ETH) mainnet on September 15, 2022, according to the latest input from co-founder Vitalik Buterin.

EthereumProof-of-StakeIt’s finally happening! Here’s how we’re getting ready for The Mergehttps://t.co/AIIUqWcDxm

— Coinbase (@coinbase) August 16, 2022

Coinbase Is Moving Extra Cautious

The official blog post also reminded us that contrary to popular belief, The Merge won’t reduce fees by itself, but is rather the path to start with, as ETH 2.0 is needed to expand the blockchain’s scalability map. This gives more ability to scale and increase compatibility with DeFi apps and various scripting languages.

However, the biggest advantage that the upgrade brings is carbon emission reduction by 99.95%, which would deem the second largest blockchain eco-friendly, making it more suitable for global adoption. Ultimately, Coinbase assures that they “will support ETH 2.0 in a variety of ways that align with our mission to increase economic freedom in the world”.

Furthermore, the staked Ethereum (ETH) that’s known on the platform as ETH2 will have to be kept frozen until early 2023, according to the blog post. That’s the timeframe for the highly anticipated upgrade to fully complete, so any users who are planning to use their Staked Ether (stETH), should initialize deposits and withdrawals beforehand.

According to Coinbase, this move is crucial to ensure a smooth transition. The extra security at this phase is most necessary because of the increased scammer activity, as Coinbase points out. Apparently, there are a lot of fraudsters asking the people in the crypto community to send their Ethereum (ETH) tokens in order to ‘upgrade to ETH 2.0’.

Despite being as cautious as a fox, Coinbase Global’s shares tumbled by another 9% after the message. Moreover, the company is still licking its wounds after the crypto winter, being down by $1.1 billion for the second quarter of 2022. As Coinbase’s shares shrank by 5 times since its all-time high, the decision to halt ETH-related deposits & withdrawals might not help the case.

BREAKING: #Coinbase prices tumble another 9% after they announce plans to halt all #Ethereum, ERC-20 Deposits, and Withdrawals during $ETH Merge. pic.twitter.com/1FzWqhXigH

— CryptoWhale (@CryptoWhale) August 16, 2022

Binance & Tether Show Support for ‘The Merge’

The support message from Coinbase comes just a week after another heavy player in the crypto game, Binance, announced their support for the upcoming developments. Binance also added that in case of any freshly forked coins, “Binance will evaluate the support for distribution and withdrawal of the forked tokens”.

Moreover, Tether and Circle are both happy to support ETH 2.0. Circle, the company behind USD Coin (USDC), said that “the switch could enhance scalability while slashing energy consumption”. However, it is unlikely that the two stablecoins will support any emerging PoW forks. Ultimately, with Ethereum’s (ETH) ‘The Merge’ providing an eco-friendly maintenance solution, many crypto companies, both established and fresh, can benefit from the eagerly anticipated innovation.