Pending The Merge, Binance has suspended ether withdrawals and deposits on some networks compatible with the Ethereum blockchain since Tuesday.
The crypto ecosystem is cautiously anticipating The Merge transition of the Ethereum blockchain, expected to be around September 13-15.
Recall that the Ethereum blockchain intends to move from a so-called “proof of work” to a “proof of stake”, which has multiple implications (see our full article on this topic).
Among the implications of this transition, centralized exchanges that hold ether (deposited by users) are starting to take measures that affect their users.
Cryptocurrency giant Binance has announced the temporary suspension starting from Tuesday of deposits and withdrawals of ether or “packaged” ether (wEth) on some networks also known as “overlays” of the Ethereum blockchain. All this waiting for The Merge.
The three networks involved are: Arbitrum, Optimism (for ether) and Ronin Networks (for wETH). In particular, they allow you to reduce transaction costs made on Ethereum.
“Secure bifurcated token allocation”
Binance explains that this procedure is being adopted “in order to prepare the Ethereum merger and ensure the allocation of forked tokens in the event of a chain separation” – in other words by a fork (see our article on this topic).
“The suspension will last until The Merge is completed. Deposits and withdrawals of Ether and wETH on affected networks will resume when the networks are deemed stable,” Binance said in a statement released Monday.
“Any deposits of ether or wEth to the aforementioned networks during the suspension will not be credited and will not be eligible for any token fork credit in the event of a chain split,” the company said, adding that ether trading is unaffected. from this measure.
In a statement released by Binance on August 25, the company had already indicated that it intended to take this step.
“Since a new token can 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.
In particular, the company cited two scenarios following The Merge. Or The Merge does not involve the creation of a new token, in which case Binance will reopen Aether deposits and withdrawals. O The Merge results in a division of the blockchain and the creation of a new token. In this case, Binance will use the “ETH ticker” for the new Ethereum chain in “proof-of-stake”.
“We will then credit the Binance accounts of the minority chain token fork users in a 1: 1 ratio, based on the snapshot of the ETH balances prior to the execution level update,” the company says.
As a reminder, to date, almost 2 thirds of ethers (63%) they are “detached” via some centralized platforms (according to the calculations of the cryptographic data analysis platform Nansen), in particular the Lido protocol which concentrates 32% of ether, Kraken (8.5%), Coinbase (7.2%) or Binance (6.7%). According to some industry observers, Ethereum’s move to “proof-of-stake” could represent a governance problem.
Binance isn’t the only cryptocurrency exchange to take such a step towards The Merge. The giant Coinbase had already indicated this in mid-August.
“While 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 don’t expect others in networks or currencies to be interested and We do not anticipate any impact on trading ETH and ERC-20 tokens on our centralized trading products, “Coinbase said.
In a post in early September, the Kraken platform also informed its users of this measure.