Frax Finance Offers to abandon any Ethereum PoW Fork
Frax joined Tether as the first stablecoin issuer to publicly support Ethereum 2.0. The proposal assumes that the project will convert any ether owned by Frax DAO on Ethereum forks with proof of work in ETH on Ethereum 2.0.
Co-founder of Frax FinanceSam Kazemyan presented a proposal that the project's stablecoin could be redeemed exclusively in the main Ethereum network with proof of ownership (PoS) after the upcoming transition of the network from proof of work consensus (PoW).
This proposal was published on the Frax management page on Thursday and is related to concerns that some Ethereum miners may conduct a hard fork of the Ethereum network during the transition from PoW to PoS - a step known as "merging". A hard fork is the separation of the network, as a result of which two different blockchains are created. As previously reported, one influential Chinese crypto miner Chandler Guo has already put forward plans for a hard fork to allocate a blockchain, which he called "ETH PoW".
Kazemian's proposal calls on the Frax DAO to choose Ethereum POS (also called Ethereum 2.0 or ETH2) as the only recognized Ethereum network to post-merge its Frax stable coin.
"Frax is the 5th largest stablecoin in the world and accounts for 20%+ TVL Curve, the token is among the top ten on Uniswap and is an important part of the Ethereum ecosystem. Thus, it makes sense to clearly convey the desire of FXS holders to the public through management," the proposal says, referring to the Frax stock management token under the FXS ticker.
If the DAO makes a decision, Frax will liquidate all tokens on any Ethereum PoW forks and will keep funds in its treasury for the repayment of stablecoins by users.
The proposal also marks Frax as the first decentralized stablecoin issuer offering public support for ETH2, although Tether's chief technology officerPaolo Ardoino has stated that his centralized stable coin will support ETH2.
The possibility that the Ethereum merger will be contested using hard forks has serious consequences for stablecoins, because such forks usually double the number of tokens after the chain is split. This situation is especially true for fiat-backed stablecoins, since an increase in supply will affect their ability to maintain their peg to the US dollar.
https://coin-signal.com/cryptonews/frax-finance-offers-to-abandon-any-ethereum-pow-fork/
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