A few weeks ago, we announced that the Crypto.com App and Exchange will be supporting the Merge. To share more on what will be the most significant update to Ethereum since its launch, in this post we’ll explain what the Merge is, what it entails, and what to expect before and after the Merge.
What is the Merge?
The Merge is the process of ‘merging’ the Beacon Chain (or the ‘consensus layer’) with the Mainnet (or the existing ‘execution layer’). The plan is to swap out the current proof-of-work (PoW) algorithm on the consensus layer and replace it with the proof-of-stake (PoS) consensus protocol that the Beacon Chain provides.
The Process of the Merge
The Merge consists of a sequence of two upgrades — Bellatrix on the Consensus Layer followed by Paris on the Execution Layer.
Bellatrix upgrades the Beacon Chain to be ‘Merge aware’, embedding the Beacon Chain with the Merge logic as validators begin monitoring the PoW chain to initiate the Merge transition. Bellatrix is scheduled for epoch 144,896 on the Beacon Chain, or approximately on 6 September 2022, 11:34 UTC.
Paris is the Merge transition itself, where Ethereum swaps its consensus from PoW to the Beacon Chain’s PoS. The Paris upgrade activates at the chosen Terminal Total Difficulty (TTD) of 58750000000000000000000, expected to take place between 10 and 20 September 2022.
The target date is 15 September 2022. However, this date might change as the TTD is based on the PoW difficulty, which is difficult to estimate precisely. Once the execution reaches the TTD, the Merge transition will be complete.
Possible Scenarios of the Merge
There are two likely scenarios that will take place during the Merge:
- Scenario A: No new tokens are created during the Merge. Crypto.com will resume deposits and withdrawals for ETH and ERC20 tokens once the Ethereum Mainnet proves to be stable and secure.
- Scenario B: The chain splits into two, one following the updated PoS chain, and the other following the forked PoW chain. The ‘ETH’ ticker will be used for tokens generated on the PoS chain, while tokens generated on the PoW chain will be forked tokens. Crypto.com will resume deposits and withdrawals for ETH and ERC20 tokens on the PoS chain once the Ethereum Mainnet proves to be stable and secure. Likewise, Crypto.com will also resume deposits and withdrawals for ETH and ERC20 tokens on the PoW chain once Ethereum forked chain proves stable and secure.
Before the Paris upgrade, forked token creators may take snapshots of users’ ETH balances. Supported forked tokens will be distributed to users proportionate to their ETH holdings and will then be available for withdrawals. Details regarding the distribution will be included in a separate announcement. Crypto.com reserves the right to update the treatment of any chain split in a further announcement.
What Crypto.com will support
- In the event of Scenario B, the forked token will go through the same listing review process as Crypto.com performs for all other tokens applicable to the user’s jurisdiction. We will notify users in a separate announcement if the forked tokens will be listed.
- Crypto.com will not support the forked token if the PoW network does not prove to be stable. Tokens created during the Merge that are deemed as illegitimate in Crypto.com sole discretion will not be supported. Crypto.com reserves its full discretion whether to support forked tokens created during the Merge.
- Wrapped ETH may or may not qualify for distribution of forked tokens depending on the specifics of the fork projects, which continues to evolve.
- Loaned ETH will not be eligible to receive forked tokens.
- Merchants under Crypto.com Pay for Business will not be eligible to receive the forked token. Merchants who would like to receive the potential forked tokens can withdraw their ETH from their Crypto.com Pay merchant account to an external wallet that supports the forked tokens.
Trading and Deposits/Withdrawals
To ensure the safety of users’ funds during and after the Merge, deposits and withdrawals of ETH and all ERC20 tokens will be temporarily suspended during Bellatrix and Paris. Crypto.com will provide an update on the specific date and time in a separate announcement. Trading of ETH and all ERC20 tokens will not be affected.
Added on 7 September 2022: Deposits and withdrawals of ETH on the following networks will be temporarily suspended to ensure the safety of users’ funds:
- ARBit (ARB)
- Avalanche C-chain (AVAX)
- Binance Smart Chain (BEP20)
- Polygon (MATIC)
- Optimism (OP)
- Cronos (CRO)
Note: Deposits and withdrawals of ETH on the above networks have been resumed on 21 September 2022.
Spot Trading (the App and Exchange): The Merge will not affect spot trading for ETH and ERC20 tokens on the Crypto.com App or Exchange. This includes automated purchases from Recurring Buy and Grid Trading Bots on the Crypto.com Exchange. All such automated purchases will be treated as purchases on the PoS chain. Note that pending ETH orders that have not been executed from Recurring Buy in the Crypto.com App and the DCA and Grid Trading Bots on the Crypto.com Exchange will not be counted in the snapshot time for the forked tokens.
Margin Trading: New ETH loans made with Margin will be temporarily suspended starting from 2 September 2022, 4:00 UTC till the Merge is completed. Existing ETH loans will not be impacted and users can continue to carry out margin trades for ETH cross and isolated margin pairs on the Crypto.com Exchange. Crypto.com will temporarily suspend the transfers of loaned ETH to the Spot Wallet during the suspension time mentioned above.
Lending: New ETH loans made on Lending and P2P Lending will be temporarily suspended starting from 2 September 2022, 4:00 UTC till the Merge is completed. Existing ETH loans will not be impacted.
Futures and Perpetual Trading: The Merge will not affect ETHUSD perpetual swaps or ETHUSD futures trading in the Crypto.com Derivatives Exchange. Such contracts will track ETHUSD on the PoS chain.
Crypto Earn
The Merge will not affect the existing Crypto Earn services. Supported forked tokens will be proportionately distributed to users with ETH allocations in Earn. No further actions will be required from the user. Rewards distributed after the Merge will be paid out in ETH PoS tokens.
Crypto Credit
If a user has taken up a loan with ETH as a collateral, the existing ETH collateral will be treated as ETH PoS. No further actions will be required from the user.
- Upon repayment or liquidation of their loan, their collateral would be returned in ETH PoS
- If the user needs to top up their collateral, they will need to put in more ETH PoS.
If a forked token was created after the Merge, the forked token will be distributed proportionate to the amount as the ETH placed for collateral.
Spending Power
If a user has taken up a loan with ETH as a collateral, the existing ETH collateral will be treated as ETH PoS. No further actions will be required from the user.
- Upon repayment or liquidation of their loan, their collateral would be returned in ETH PoS.
- If the user needs to top up their collateral, they will need to put in more ETH PoS.
If a forked token was created after the Merge, the forked token will be distributed proportionate to the amount of ETH placed for collateral.
Fiat Services
The Merge will not affect fiat services.
Take note:
- You will not need to do anything to protect your funds before the Merge. Any funds held in your wallet will still be accessible. No action is required on your part.
- The entire history of Ethereum since genesis will remain intact and unaltered after the transition to PoS.
- Be on high alert for scams trying to take advantage of users during this transition. There is no ‘ETH2’ token and you do not need to take further actions to keep your funds safe.
Crypto.com reserves the right in its sole discretion to amend or change or cancel this announcement at any time and for any reasons without prior notice.
Kindly refer to status.crypto.com for all the latest updates.
We thank our users for their support and understanding.
