Circle to only support Ethereum proof-of-stake chain after integration

Quick Take

  • Circle will only support the proof-of-stake chain after the chains merge, which is expected to occur later this year.

USD Coin (USDC) issuer Circle Internet Financial will only support the Ethereum proof-of-stake chain after the chain integrations, the company announced in a blog post on Tuesday. 

The integration, dubbed The Merge, is expected to land in the third or fourth quarter of this year, with a soft deadline on December 19. Circle will integrate the current Ethereum mainnet with the new proof-of-stake consensus layer called the Beacon Chain. The existing mainnet is currently secured by proof-of-work, an algorithm that helps the decentralized network reach consensus securely.  

But proof-of-work has been criticized for the environmental impact of its high energy usage. The proof-of-stake chain is expected to help Circle in reducing its energy consumption. 

Following the decision to solely support the proof-of-stake chain, Circle said in the blog post that it does not “anticipate disruptions to USDC on-chain capabilities nor to our fully automated issuance and redemption services.” Users are not expected to do anything with their funds and wallets as well as to upgrade before The Merge, Circle previously wrote.

“While we don't speculate on the possibility of forks post Ethereum Mainnet merge, USDC as an Ethereum asset can only exist as a single valid ‘version,'” Circle added. 

The announcement was made several days after Ethereum co-founder Vitalik Buterin dismissed the possibility of long-term adoption of Ethereum proof-of-work fork after the transition to the proof-of-stake chain.  

The company also announced its latest testnet plan for the last trial in the proof-of-stake transition: “Circle's testing environment is connected to the Goerli Ethereum testnet, and we will monitor closely as it merges with Prater in the coming days.” Should no issues arise during the last testnet, developers will work on the last phase of the proof-of-stake mainnet merge. 

USDC is the second largest stablecoin after Tether with a total supply of $45 billion. The stablecoin has become a core building block for Ethereum DeFi innovation.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.