JAKARTA – CEO of crypto exchange Coinbase, Brian Armstrong recently stated that his party plans to discontinue Ethereum staking services if there are regulatory issues to protect the security of the Ethereum network.
As is known, Ethereum will complete The Merge phase which is the process of transitioning consensus from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This is a historic moment for Ethereum as it seeks to switch to a PoS model that is claimed to be more environmentally friendly. PoS also enables an ETH staking mechanism.
That way, ETH may allow mining or mining again but allow a staking mechanism or ETH locking process to validate transactions in the network. Stakers will be rewarded in the form of ETH.
This change aims to address some of the key issues plaguing the Ethereum network, such as scalability and excessive transaction fees.
Launching CoinCodeCap, Lefteris Karapetsas, creator of the open-source crypto analysis and accounting tool Rotki, presented the query on Sunday. Karapetsas is challenging some Ethereum players in choosing between two options if government authorities require them to censor certain addresses.
“This is a hypothetical that we will hopefully not face. But if we did, I think we'd go for B. Need to focus on the bigger picture. There may be some better options (C) or legal challenges as well that can help achieve a better outcome," Armstrong said, August 17, 2022.
However, he added that there may be legal recourse, in which case Coinbase will confront the government and try to achieve a better outcome for everyone. Coinbase itself has become a public company and has been listed on the Nasdaq stock exchange.
In recent months, the crypto market has experienced a decline in price. Coinbase is one of the companies affected by the bear market conditions. Coinbase was forced to cut some of its employees to save the company, as other crypto exchanges have done.
Armstrong's response is significant given that Coinbase considers its staking service profitable for businesses and relies heavily on it for the company's future. Last week, JPMorgan analysts wrote in a note that Coinbase and its stock (COIN) should benefit from The Merge Ethereum because of the company's staking services.
Ethereum co-founder Vitalik Buterin said he wanted to punish validators for cooperating with censorship demands by burning their tokens in the recent Twitter vote on Ethereum censorship.
Eric Wall, a software engineer, polled a tweet from Lefteris Karapetsas questioning five key Proof-of-Stake validators whether they would obey censorship orders or respond by turning off their staking service.
On the other hand, Ethereum developers also explained that The Merge process will not reduce transaction fees (gas fees) on the Ether network. Even so, The Merge Ethereum itself is scheduled to be completed in September.
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