Tether, one of the largest stablecoin has labelled Ethereum’s transition from Proof-of-Work (PoW) algorithm to Proof-of-Stake (PoW) as the most significant moment in blockchain history. This comes a day after USDC stablecoin issuer Circle said that it backs ‘The Merge’.
Ethereum’s Merge will soon decrease the blockchain’s energy usage by 99 per cent. This means the energy expenditure of Ethereum will be roughly equal to the cost of running a home computer for each node on the network. This is important because cryptocurrency has been widely criticized for affecting the environment. Both PoS and PoW are methods of mining cryptocurrencies. Most legacy cryptocurrencies, such as Bitcoin, rely on a proof-of-work mechanism. PoW mechanism is a traditional form of crypto mining where thousands of computers are required in a mining facility, consuming high electric power.
But in the case of PoS, anyone who owns any amount of cryptocurrency can put up their tokens as collateral for the development of blockchain. In return, the user is rewarded a fixed percentage of the pledged assets as rewards. (Take a quick detour of our article on Ethereum’s Merge)
Tether believes that in order to avoid any disruption to the community, especially when using Tether in DeFi projects and platforms, “it’s important that the transition to POS is not weaponized to cause confusion and harm within the ecosystem.” For this reason, Tether said that it will closely follow the progress and preparations for this event and will support POS Ethereum in line with the official schedule. “We believe that a smooth transition is essential for the long-term health of the DeFi ecosystem and its platforms, including those using our tokens.”
Tether is the biggest stablecoin in the market trading at 10 times the volume of USDC, and is the most used stablecoin on the Ethereum blockchain with 3 times more people holding tethers in their wallet than any other stablecoin.
Meanwhile, this week Ethereum will undergo its final Merge trial, and it is expected that September 19 date is when it will be launched in full power, without any further delay.