A new report by decentralized application intelligence platform DappRadar warns that the upcoming merge of Ethereum (ETH) could harm one of the key sectors of the cryptocurrency industry.
Citing crypto investment giant Grayscale, the report To tell The stablecoin, which currently enjoys a market cap of $142.82 billion, could be an unintended victim of Ethereum’s move to a proof-of-stake mechanism.
Grayscale has expressed concerns about the potential impact of the merge, particularly on tokens running natively on Ethereum. I think we can connect.
A grayscale concern is that merging could create scenarios where smart contract-locked stablecoins and tokens cannot be redeemed.
The crypto investment firm also notes that token and stablecoin holders may panic and start liquidating their holdings. Such an outcome would generate a significant amount of selling pressure. “
Decentralized autonomous organization MakerDAO (MKR) is another party pessimistic about the Ethereum merge, according to the report.
MakerDAO (MKR), the builder of stablecoin DAI, claims in a Twitter thread that a merger could do more harm than good.
They explained that the merger could lead to perpetual contract backdation and negative funding.
Additionally, MakerDAO said the launch could cause sales pressure across the chain existing on the proof of work. “
Backwardation and negative funding refer to market conditions in which the futures price is lower than the expected spot price.
According to a DappRadar report, MakerDAO is also concerned that the security and performance of the Ethereum network could be adversely affected by future upgrades.
There is also the potential for network downtime as not all Ethereum-based protocols transition to PoS on the Ethereum chain. Maker noted that this could impact users and transactions alike. Note. Similarly, replay attacks against DAI or MKR forks were not ruled out.
A replay attack is an exploit on a blockchain where two forked crypto assets are considered valid across the chain.
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