Coinbase – the largest cryptocurrency exchange in the United States – will temporarily suspend Ethereum-based deposits and withdrawals during September’s “merge” upgrade.
The exchange posted a blog post on Tuesday explaining what to expect from both Coinbase and Ethereum following the network’s long-awaited transformation.
Per Coinbase’s announcement, the suspension – which will impact all on-chain ETH and ERC-20 token movements – is to ensure the upgrade is properly reflected within Coibase’s internal systems. Trading of assets already at the exchange is not expected to be impacted. From the users’ point of view, the merge is expected to be “seamless.”
“We view this event as a major step toward scaling adoption of the crypto economy and will support it in a variety of ways that align with our mission to increase economic freedom in the world,” said the company.
“The Merge” is the nickname for highly anticipated Ethereum upgrade that’s six years in the making. It will switch the protocol’s consensus mechanism from proof of work (POW) to proof of stake (POS), reducing its energy consumption by a projected 99.95%.
The transition also sets the stage for Ethereum’s scaling roadmap, which will help it address issues pertaining to high transaction costs. After completing its Goerli public test net merge last week, the merge is finally slated to take place on September 15th.
Leading up to the event, Coinbase advised users to beware of merge-related scams, which may solicit users’ funds to “upgrade to ETH2,” even though there is no token associated with the upgrade. “Your assets will be safe and secure during this period and no action is required to upgrade on your part,” said the exchange.
Coinbase Cloud customers running node infrastructure are expected to experience 10 minutes of downtime for a routine upgrade leading up to the merge. Meanwhile, users of Coinbase’s self-custodial wallet software “should experience minimal to no impact” from the transition.
Coinbase said that any “ETH2” deposits currently staked with the platform will be listed under users’ “ETH” balance following the merge. However, balances will still be presented separately as “staked ETH,” and are not expected to be available for withdrawal until early 2023.
Over 10% of all circulating ETH is currently locked as staked ETH in the ETH 2.0 deposit contract. According to Glassnode, over 50% of these funds are managed by 4 staking providers including Coinbase, Binance, Kraken, and Lido.