Binance has announced that it will restrict Ethereum deposits and withdrawals from certain blockchain networks starting this Tuesday. In preparation for The Merge, the crypto exchange does not want to take any risks.
Deposits and withdrawals suspended until completion of The Merge
The Ethereum blockchain is set to transition to The Merge from September 13-15. Members of the crypto ecosystem are watching this transition closely to see what happens.
The Ethereum blockchain plans to move from proof-of-work to proof-of-stake. This merger, called The Merge, involves many consequences. The main consequences related to The Merge are detailed in our previous article.
Ether exchanges that hold user coins on deposit have started implementing changes that affect their users. Binance announced that starting Tuesday it will temporarily stop accepting Ether or wEth deposits and withdrawals. The reason for this is to be able to prepare for the next The Merge event.
“The suspension will last until The Merge is over. Deposits and withdrawals of ether and wETH on the impacted networks will resume when the networks are deemed stable,” said Binance in a press release published on Monday.
The different layers of the Ethereum blockchain are affected by this decision. Ethereum transactions incur significant costs, however, these can be reduced through the use of three overlays. Called Arbitrum, Optimism and Ronin Networks, they make it possible to transact on Ethereum without incurring high costs.
Binance indicates that this step was taken in order to prepare for the Ethereum merger and to secure the split tokens in the event of a blockchain fork. Moreover, Binance had already announced this temporary suspension on August 25. This announcement was therefore already planned.
“Any deposits of ether or wEth to the above networks during the suspension will not be credited and will not be eligible for any forked token credit in the event of a chain split,” the company clarifies, adding that ether trading is not affected by this measure.
Fears of a hard fork
Binance mentioned two different scenarios that would follow The Merge. First, the company said that the new Ethereum chain would use the “ETH” ticker in proof-of-stake if the merger results in a new token. Alternatively, Binance said deposits and withdrawals for Ether would be available if The Merge does not result in a new token.
“Since a new token may be created during a hard fork, Binance has taken the following measures to reduce trading risks from price volatility and to maintain the safety of user funds during the hard fork” , says Binance.
According to crypto data analytics platform Nansen, a few centralized platforms hold the majority of Ethereum tokens. The Lido protocol claims to own 32% of all Ether, with Kraken owning 8.5%, Coinbase 7.2%, and Binance 6.7%. In addition, 63% of these tokens are deposited by owners in stacking programs via these platforms. Some members of the crypto community are concerned that Ethereum has a governance issue due to its transition to proof-of-stake.
Binance therefore joins Coinbase, which had made the same announcement in mid-August. Although the merge is meant to be seamless from a user’s perspective, this downtime allows us to ensure that the transition has been correctly reflected by our systems. We do not expect any other networks or currencies to be impacted and do not expect any impact to trading ETH and ERC-20 tokens on our centralized trading products,” Coinbase said. The Kraken platform, meanwhile, announced this measure via a post in early September.
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Binance Suspends ETH Deposits and Withdrawals Starting Tuesday
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