05 Sep Bitfinex Supports the Ethereum Merge!
The Ethereum Merge is considered to be one of the most anticipated blockchain upgrades in the history of the cryptocurrency industry, and Bitfinex is pleased to support this event.
What is the Merge
The move to a Proof-of-Stake (PoS) consensus model (from the current Proof-of-Work (PoW) model) is a significant milestone in the original Ethereum roadmap. The main goal of the transition is not only to make Ethereum more energy-efficient and secure but also to lay the groundwork for enabling more scalability through sharding.
Instead of changing the algorithm to PoS in one massive and potentially dangerous upgrade, the Ethereum researchers and developers decided to divide it into two phases.
The first phase — launching the Beacon Chain — was completed in December 2020. This allowed for creating a different parallel Proof of Stake chain that could be tested in production for some time without directly affecting the existing PoW network.
The Merge is the second phase in the transition, which merges the Beacon Chain consensus layer with the Ethereum Virtual Machine (EVM) state of the Ethereum PoW chain. The transition to PoS aims at lowering the power consumption to secure Ethereum by around 99.95%. More information about the main implications, risks and misconceptions of this event can be found here.
The technical side of the upgrade
The Ethereum Merge is expected to occur between 10-20 September 2022. Once the Ethereum (ETH) network upgrade occurs, a snapshot of all ETH balances and margin positions will be taken. In order to execute a smooth transition during the Merge, deposits and withdrawals for ETH and all Ethereum-based (ERC20) tokens may be temporarily suspended for accounting and reconciliation purposes, but otherwise, we will endeavour to support the Merge in a way that is as seamless as possible to our users.
It’s important to note that there is a possibility that ETH deposits sent closer to the Merge event may not count toward the snapshot of users’ ETH balances, so only settled account balances at the snapshot time will be considered.
Following the Merge, ETH balances will reflect ETH on the updated Ethereum protocol, which uses a Proof of Stake consensus mechanism.
In connection with the Merge, one or more forks could occur. Bitfinex will further decide whether to support that fork. If Bitfinex decides to support one or more forked tokens, Bitfinex intends that users with an ETH balance in their Bitfinex Account as of a to-be-determined fork snapshot will receive forked tokens.
Users who are engaged in peer-to-peer (P2P) financing activities on Bitfinex in ETH at the time of the fork snapshot should be aware that:
- Users with Margin short ETH positions will be debited an equivalent amount of the forked token from their margin wallet. There is no guarantee that Bitfinex will open a market for the forked token. Any decision by Bitfinex to list or not list a forked token market will not impact your obligation to settle any negative balances. A failure to timely settle negative balances may result in Bitfinex settling those balances at prevailing market rates, as determined by Bitfinex in its sole discretion.
- Users with Margin long ETH positions will be credited an equivalent amount of the forked token to their margin wallet.
- Users who are lending their ETH will be credited an equivalent amount of the forked token to their wallet balance.
The assets accounting and reconciliation will be automatically processed by Bitfinex, and no action is required from the users’ side. There will be no need to convert the existing ETH during or after the Merge. It will continue to be visible as ETH in the Balances section.
ETHW (PoW) and ETHS (PoS) chain split tokens (CSTs)
The ticker for ETH Proof of Stake will remain as ETH. Any new tokens as a result of a fork will take a new ticker.
We will review any new forked tokens to see whether we want to support them and make them available as trading pairs or not. Please look for further announcements on that topic as more information becomes available.
If Bitfinex decides to support one or more forked tokens, Bitfinex intends that users with an ETH balance in their Bitfinex Account as of a to-be-determined fork snapshot will receive forked tokens. Users will receive these tokens after the fork snapshot, and all necessary accounting reconciliations are complete.