FTX announced that ETH withdrawals and deposits will be blocked until the end of September.
FTX will suspend ETH trading for the Merge
FTX will suspend deposits and withdrawals of ETH and ERC-20 tokens about half an hour before the Bellatrix update related to the consensus layer (epoch 144,896 on the Beacon Chain: 6 September 2022 at 11:34:47 AM UTC) and the Paris update related to the execution layer.
With this statement on the company’s website, the FTX exchange announced that it will suspend deposits and withdrawals of ETH and related Ethereum-based tokens during the Ethereum update, scheduled for 15 September.
Meanwhile, the suspension will not affect trading of the cryptocurrency, as had appeared to be understood in a later deleted company tweet.
The suspension of deposits and withdrawals is necessary, according to FTX, because one or more PoW ETH forks may emerge after the Merge.
The company explains on its corporate website:
“If a canonical PoW ETH fork emerges, FTX will credit users with the ETH token from the PoW fork. ETH borrowers will receive ETH PoW from the fork based on their ETH balance at the time of the fork snapshot that will occur before the Paris update related to the execution layer. FTX reserves the right to update the treatment of any ETH fork PoW at any time.”
This move by the exchange was decided precisely to secure its users in the face of what is considered to be one of the biggest revolutions in crypto in recent years. Certainly, the new Ethereum update will need some time to be fully implemented and become fully operational.
The first consequence, as also stated by FTX, is that Ethereum forks may be created to preserve the old consensus system based on Proof of Work and not the new one of Proof of Stake brought by the Merge.
Justin Sun in favor of the Ethereum fork
Tron founder Justin Sun has emerged as one of the most staunch supporters of the need for a hard fork of Ethereum after the blockchain shifting to a Proof-of-Stake (PoS) mechanism, an event known as The Merge, scheduled for September.
Although there are those who do not believe that this fact will have much impact on Ethereum’s blockchain, which will essentially remain the same, as stated by Jonathon Miller, the Australian head of the cryptocurrency exchange Kraken, who in a recent interview explained how Ethereum’s fork might seem like a dramatic event, but that he is not worried about it at all:
“I could fork Ethereum tomorrow [but] will people use that fork? That’s a different question. That’s a question that miners have to ask themselves. Ethereum is the network of choice for developers and it will remain that way for some time.”
According to Ethereum developers, the Merge is designed to transition to PoS with no downtime due to total terminal difficulty (TTD), which will guarantee the transition based on the total mining power needed to build a chain, but evidently FTX wanted to adopt this choice anyway because it is convinced that this update will have immediate effects on the blockchain.
Then in recent days came a clarification from the Ethereum Foundation regarding the topic related to gas fees for making transactions on the blockchain, on which the new update may not even have such an impactful effect, as believed by many:
“Gas fees are a product of network demand relative to the network’s capacity. The Merge deprecates the use of proof-of-work, transitioning to proof-of-stake for consensus, but does not significantly change any parameters that directly influence network capacity or throughput.”