The largest cryptocurrency company in the United States, Coinbase is planning to halt Ethereum deposits and withdrawals during the Merge. Coinbase also confirms that staked Ethereum will still be unavailable for withdrawal even after the Merge for many months to come. This was all announced in a blog post on Tuesday that explained what to expect from Coinbase and Ethereum following the Merge.
According to Coinbase’s announcements, the suspension of deposits and withdrawals (which will impact all ETH and ERC-20 token movements) is to ensure that the upgrade properly shows in Coinbase’s systems. The merge is already expected to be seamless from the users’ point of view as trading of assets will not be affected.
“The Merge” is the nickname of the long-awaited Ethereum upgrade that has been in the works for six years. It will switch the protocol’s working mechanism from Proof of Work (PoW) to Proof of Stake (PoS), reducing it’s energy consumption by up to 99.5% in the process. The transition will also clear the way for Ethereum’s scaling roadmap which will address the issue of high transaction costs. The merge is finally slated to take place on 15th September after completing it’s Goerli public test net merge last week.
Building up to the event, Coinbase advised it’s users to be wary of merge-related scams which may solicit users funds to upgrade to ETH2. The exchange reiterated that there is not token associated with the upgrade and all assets will be secure during the process with no action required on users’ part to upgrade. All Coinbase Cloud customers will experience 10 minutes of downtime for a routine upgrade building up to the merge while users of Coinbase’s wallet software should experience minimal to no impact during the Merge.
Coinbase has also informed its users that any currently staked ETH on the platform will be listed under users’ ETH balance after the merge. However, the balances will still be listed separately as staked ETH and will not be available for withdrawal until early 2023. Over 10% of circulating ETH is currently staked ETH in the ETH 2.0 deposit contract. Also, over 50% of these funds are managed by four staking providers; Binance, Coinbase, Lido and Kraken, according to Glassnode.
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