Coinbase Details Potential Risks of Ethereum Merge As Highly Anticipated Update Approaches
Top US-based crypto exchange platform Coinbase is giving customers full transparency over the possible risks associated with Ethereum’s (ETH) upcoming merge.
Coinbase Cloud recently posted its ultimate blog about the upcoming Ethereum upgrade.
“Welcome to the final edition of the ETH2 updates!
With the merge just around the corner, this will turn into a series about stuff after the merge. In this edition, we talk about two things: Bellatrix Upgrade and some of the potential risks associated with the merge.
The Bellatrix Upgrade happened on Sept 6 and there was a slight decrease in the participation rate which increased back up after.
This leads to a talk about potential risks surrounding the merge. They could be classified as technical, operational, or economic risks.”
Coinbase’s latest report outlines technical, operational and economic risks associated with the merge.
For the economic risks, the report details a surge in ETH borrowing as investors try to accumulate as much ETH as possible before the merge.
The report says the outcome of the borrowing frenzy is unknown, but it has already forced the leading decentralized finance (DeFi) lender, Aave (AAVE), to issue a proposal to temporarily pause ETH borrowing.
If a forked token launches when Ethereum switches to proof-of-stake, anyone holding ETH is positioned to receive an equal number of forked tokens.
The merge is anticipated to happen either later this week or early next week.
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