A cryptocurrency researcher by the name of Coin Metrics pointed to price discrepancies in DeFi protocols as an example of one obvious danger, and advised users to refrain from transacting in any way on the day of the Merge. The Ethereum (ETH) Merge is drawing closer, and people are talking more and more about the potential risks that the event could bring with it.
Coin Metrics said in a recent research titled Mapping Out The Merge that despite the fact that the Merge will, on the whole, be beneficial to Ethereum, “a lot can go wrong in a network transfer of this magnitude,” according to the company’s findings.
As an illustration, the company mentioned that the mock Merge that occurred on the Goerli testnet occurred twice on its nodes. This is because the company has been operating its own validator nodes on Ethereum’s new Beacon Chain since 2020. According to the additional information in the report, “[this] may have been disruptive to uptime had it been the actual Merge.”
This year, the Goerli testnet Merge took place in early August. It was the final test run before the official Merge, which is slated to take place between September 10 and September 20.
Given “the scope of issues that potentially damage Ethereum’s uptime,” Coin Metrics recommended in its research that users should abstain from performing any transactions on the Ethereum network on the day of the Merge. This recommendation was made in light of the findings in the report.
The paper identified a change in the ordering of blocks on the chain, which is referred to as a “reorg,” as one of the things that may possibly go wrong. In the event that this transpired, the experts issued a warning that “a big set of transactions might be returned back to the mempool and get trapped.” They went on to say that this might lead to “major disruptions in the network.”
Users should also be aware that there is a potential for delays during the transition from the previous proof-of-work (PoW) chain to the new proof-of-stake (PoS) chain. This risk is related to the fact that PoW stands for proof-of-work. The analysts went on to clarify that this might potentially lead to pricing differences in the on-chain loan markets, decentralized exchanges (DEXes), and DeFi protocols.
According to the report, “While these may generate generous payouts in [Maximal Extractable Value – MEV], they could also negatively impact regular users.” This is in reference to the value validators can extract from users by reordering, inserting, or censoring transactions within blocks. “While these may generate generous payouts in [Maximal Extractable Value – MEV], they could also negatively impact regular users.”
In conclusion, Coin Metrics stated that despite all of the risks, the Merge still marks a new chapter for Ethereum that has the potential to bring “a host of exciting new scalability solutions” to the most popular smart contract network. This potential was stated despite the fact that there are risks associated with the Merge.
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