Ethereum co-founder Vitalik Buterin warns that centralized stablecoins such as Tether (USDT) and USD Coin (USDC) could become “important decision makers in controversial hard forks” in the future.
Buterin formulated the corresponding warning at the BUIDL Asia conference in Seoul, where the figurehead of the smart contract platform spoke together with Illia Polosukhin from Near Protocol about the upcoming merger of the Ethereum network.
For example, the former co-founder argues that stablecoins could play an important role in the decision-making of the community in the future when it comes to which direction to take in a hard fork.
A hard fork is literally a “hard split” of a blockchain that separates it into two different versions. As a rule, one of the two versions is clearly preferred by the community:
“After a split, there are two separate networks […] and the crypto exchange, Oracle services, stablecoin issuers, etc. then more or less decide on which version they will bet on or which will be successfully continued.“
“Then it can happen, for example, that you have 100 billion USDT on one chain and 100 billion USDT on the other, then Tether has to decide which version is no longer valid,” Buterin explains.
However, the Ethereum co-founder sees “no signs yet” that such a conflict threatens even with the long-awaited merge or the switch to the proof-of-stake (PoS) consensus procedure in September.
“I think that this will definitely become more of a problem in the distant future, because then stablecoins like USDT and USDC will have to decide which version of Ethereum they want to continue with, which could play a major role in the directional decisions of controversial hard forks.“
Only in the next five to ten years could such a controversial hard fork be launched, which could be coined by the major stablecoin publishers. According to Buterin, a possible solution would be to shift to a variety of stablecoins.