Binance will suspend ETH & ERC-20 deposits and withdrawals during the Merge, while the network transitions to its proof-of-stake Beacon chain in September (15th or 16 of September according to estimates)
The move was made by the world’s largest exchange by transaction volume in an effort to offer stability during ‘The Merge,’ which is expected to take place in mid-September 2022. Following Coinbase earlier in August 2022, Binance is the second major exchange to announce the suspension of ETH deposits and withdrawals.
According to a Binance release, the exchange is scheduling the suspensions to coincide with two significant improvements that will assist Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS). The exchange stated that during a hard fork, a new token might be produced, mandating actions to limit trade risks and safeguard the safety of user money that could be affected by price volatility.
Binance will suspend ETH & ERC-20 deposits and withdrawals on September 6 during the Bellatrix consensus layer upgrade, as well as on September 15 during the Paris execution layer update.
The exchange also proposed two scenarios that it believes are likely to occur during the Merge. Scenario A assumes that no new coin is launched, in which case Binance would prioritize reopening deposits and withdrawals for ETH and ERC-20 tokens.
The second scenario addresses the prospect of the Ethereum chain breaking into two competing chains, resulting in the creation of a new coin. Binance may utilize the ETH ticker for the Ethereum PoS chain in this scenario.
The branched cryptocurrency from the minority chain will subsequently be credited to Binance users’ accounts at a 1:1 ratio. This will be based on an ETH balance snapshot taken before the Paris execution layer update expected on September 15.
Binance has said that withdrawals for a hypothetical forked cryptocurrency will be permitted, and distribution specifics will be handled in a subsequent release closer to the time.
Trading in USDS-M and COIN-M ETH Futures Contracts is likely to be unaffected, however, Binance has warned that it may take further precautions such as altering margin tiers such as maximum leverage value and maintenance margin.
After the Merge, Ethereum PoW miners will be able to move their hash power to the Ethereum Classic Binance Pool.
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