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According to Ethereum co-founder Vitalik Buterin, centralized stablecoins such as Tether (USDT) and Circle USD (USDC) could become “an important decider of future contentious hard forks.”

Buterin discussed Ethereum’s upcoming merger with Illia Polosukhin, co-founder of Near Protocol (NEAR), at the BUIDL Asia conference in Seoul on August 3.

The Ethereum co-founder believes that centralized stablecoins could be an “important” determinant of which blockchain protocol the industry “respects” in a hard fork.

A hard fork occurs when the protocol of a blockchain network fundamentally changes and effectively produces two versions. Often, one chain ends up being more popular than the other.

“At the moment of the merger, you will have two [separate] network […] Then you have exchanges, you have oracle suppliers, you have stablecoin suppliers, and they somehow decide which one they respect. “

“Because by then, you’ll have $100 billion in USDT on one chain and $100 billion in USDT on the other chain, cryptographically — so they [Tether] One needs to stop respecting one of them,” Buterin explained.

However, Buterin said he “sees no indication” that this debate will be an issue in Ethereum’s upcoming merger, noting that the centralized stablecoin issue is more of a problem for future hard forks.

“I think it’s definitely going to be a bigger issue in the further future. Basically, the fact that USDC decides which chain to consider ethereum could be an important determinant of contentious hard forks in the future.”

He added that over the next five to 10 years, Ethereum could see more contentious hard forks and centralized stablecoin providers could carry more weight.

“By then, maybe Ethereum will have a weaker foundation, maybe ETH 2’s client team will have more power, maybe someone like Coinbase will run a stablecoin at the same time and acquire one of the client teams at that point […] Like a lot of these things could happen,” he said.

As a potential antidote to centralized players, Vitalik recommends choosing between different kinds of stablecoins:

“The best answer I can think of is to encourage the adoption of a wider variety of stablecoins. Basically, you know, people can use USDC, but they can also use DAI, like at this point, I mean, like DAI took this very decisive line of saying, ‘We’re not going to be a pure crypto economy we’re going to be wrappers around a whole bunch of real-world assets.'”

related: Ethereum Merger: How Will PoS Transition Affect the ETH Ecosystem?

The merger is one of Ethereum’s most significant technical updates since its inception, as it transitioned from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.

Following the successful integration of the Goerli testnet in mid-August, plans for the merger continued, with Ethereum developers setting September 19 as the permanent date for the merger of the current PoW chain with the PoS chain.