Ethereum Community, Exchanges Prepare for the Merge

The Merge is estimated to occur shortly after 6:42 UTC (2:42 am ET)
Major exchanges are planning to suspend processing for ether and Ethereum token deposits and withdrawals from shortly before the Merge until the dust settles

Watch Livestream replay

Ethereum is about to hit a milestone. In a matter of hours, after years of planning, we will finally know whether the Merge was a success.

It’s a fundamental change to the blockchain, but one that was foreseen even before the genesis block. Co-founder Vitalik Buterin, announcing the Ethereum crowd sale in a 2014 blog post, already had in mind a transition away from Bitcoin’s Nakamoto consensus based on proof-of-work, to something else.

“We may choose later on to adopt alternative consensus strategies, such as hybrid proof of stake,” he wrote. Buterin was specifically referring to the rate of ether issuance, and added the caveat lector, “however, we make absolutely no promises of this.”

For years the Merge was more in the realm of promise than reality — the so-called “difficulty bomb,” which will guarantee the transition to proof-of-stake, was delayed six times, most recently in April.

But now the clock is ticking, the pandas are touching, and all stakeholders must be ready.

Exchanges’ actions

Major exchanges such as Binance, Coinbase, FTX and Bybit all plan to suspend processing of deposits and withdrawals of ether and Ethereum tokens — the vast majority of all non-Bitcoin cryptoassets — around one hour before the Merge, until the coast is clear.

Ethereum developers will collectively breathe a sigh of relief once the first two “epochs” are finalized post-Marge — about 13 minutes — as seen on Beaconcha.in.

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Exchanges are anticipating an Ethereum fork retaining proof-of-work, which will create duplicate ether, most commonly referred to as ETHW.

Binance, for example, states “If the ETHW chain persists, Binance will handle all technical requirements involved for all users holding ETH and WETH in their Binance accounts, and credit the forked token (ETHW) to eligible users’ Binance accounts at a ratio of 1:1.”

It’s unclear when that will occur or when withdrawals of any forked assets will be available.

As expected, the cost to borrow ether skyrocketed on DeFi platforms such as Aave, to over 100% annualized, prior to such borrowing being suspended as a precaution.

On perpetual futures markets, the cost to short ether is similarly elevated, as speculators are taking short term positions to hedge long spot exposure, in the hopes of cashing in ETHW forked tokens. Yet, the price of ETHW IOUs has dipped to less than 2% of ether’s value, according to CoinGecko.

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Where to watch and what to watch for

The largest Merge “viewing party” will likely be on the Ethereum Foundation’s YouTube channel. Over 1,700 viewers were already waiting for the scheduled livestream around 6 hours before its expected start time.

Expect a flurry of Twitter spaces and impromptu celebrations to crop up.

But watch out for scammers that aim to exploit the hype surrounding the event.

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As for the Merge itself, watch for blocks being produced, and the validator participation rate, John Calabrese, head of product at Nansen, told Blockworks.

“What we’re looking for is 66% participation rate — anything higher than that — and then blocks will go through. Anything lower than that, there may be problems,” Calabrese said.

The data aggregator eth2.tax tracks those key stats.

There may be empty blocks produced in the first minutes, but that phenomenon should diminish over time.