- Nexo firmly supports Ethereum’s upcoming Proof of Stake era and the subsequent improvements.
- Nexo will evaluate logistics and support for distribution of the forked tokens should there be one or more Proof of Work (PoW) forks. The forked tokens would be distributed directly into users Nexo account if the network shows healthy technical parameters and promises significant value to the users.
- As a precautionary measure and to ensure safety of funds, Nexo will briefly pause new ETH and ERC-20 token top-ups and withdrawals during the Merge
- Swapping and borrowing against ETH and ERC-20 tokens and sending/ receiving assets from other, non-Ethereum networks will be possible at all times.
- No action is required to upgrade on users part and users assets will be secure, as always.
- The Merge culminates years of work towards a greener and more scalable Ethereum.
The Merge – the biggest event in Ethereum’s history – is anticipated on or around September 15, 2022. Marking a turning point in its evolution towards a more secure, less energy-intensive, and highly scalable future, Ethereum will migrate from a Proof of Work (PoW) consensus mechanism to the Proof of Stake (PoS) model.
What is the impact of the Merge on Ethereum and your ETH holdings on Nexo? How has Nexo prepared for the changes? Read on to find out.
Why Is the Merge the Most Important Advance in Ethereum’s Evolution?
The Merge represents the joining of the existing execution layer of Ethereum, the Mainnet, with its new PoS consensus layer, the Beacon Chain. Among other improvements, it eliminates the need for energy-intensive mining, greatly reduces inflation, and secures the network, giving it a potential environmental, social, and governance (ESG) component.
The Ethereum community has been readying itself for the move for two years, undertaking extensive testing and bug bounties to ensure a safe transition. The final pre-transition trial – the Goerli public testnet merge – was passed earlier in August. The next step is Bellatrix – a Consensus Layer upgrade that will kick off the process of the Merge and set everything in motion.
As DeFi and NFTs have become more popular, the Ethereum network has experienced congestion and skyrocketing gas fees. Even though PoS alone doesn’t lower transaction fees, it does enable Ethereum to continue delivering on its scalability roadmap. A true milestone, the Merge will reduce energy consumption for the network by a projected 99.95% in comparison to PoW. Simultaneously, the transition will make Ethereum better for implementing new scaling solutions, allowing more users to participate.
At Nexo, we view this transition as a remarkable step in realizing the vision of Ethereum and decentralized finance in general – economic sovereignty and a more scalable, secure, and sustainable financial system.
What Is Nexo Doing to Support the Merge?
Nexo will fully support the transition to the new PoS chain as the consensus layer for its Ethereum wallets. To ensure all wallets work seamlessly during the Merge, Nexo has been actively preparing for it and ensuring our customers do not need to perform any additional work. In essence, nothing changes for Nexo wallets or tokens.
How Would Nexo Handle a PoW Fork?
In the event of one or more Proof of Work forks, Nexo will assess the viability of that chain and evaluate the logistics of and support for distribution of the forked tokens. As always, should the network demonstrate* healthy technical parameters and unlock significant value for our users, we would distribute the forked tokens straight to your accounts. All forked tokens will undergo the same rigorous listing review process as Nexo does for any other asset listing on the Nexo Exchange and platform.
*Evaluation of the network would be based on technical fundamentals, including hash power, safe infrastructure, as well as exchange support in terms of spot and futures trading markets.
How Will I Be Affected as a Nexo Client?
On the Merge date, our team will briefly pause Ethereum (ETH) and ERC-20 token top-ups and withdrawals as a precautionary measure. All such transactions will be processed once ETH and ERC-20 top-ups and withdrawals are resumed.
Please note that swapping ETH and ERC-20 tokens on the Nexo Exchange will be possible at all times before, during, and after the Merge.
The Merge should be seamless for our clients, but this downtime is necessary for us to verify that our systems have successfully transitioned. We do not expect any other networks or currencies to be impacted. You will be informed via our social media channels (Twitter, Reddit, Telegram) when ETH and ERC-20 tokens are once again available for top-ups and withdrawals.
During the window (precise time to be communicated cross-channel), you can still:
- Receive and send all assets from other, non-Ethereum networks that are supported by Nexo and available for top-ups and withdrawals;
- Swap ETH and ERC-20 tokens on the Nexo Exchange;
- Swap for other cryptocurrencies and buy and sell with existing funds on the Nexo Exchange;
- Borrow funds against, use the Nexo Booster, and the Nexo Card with ETH and ERC-20 tokens.
While our role is to protect users’ assets and help ensure a seamless transition across Nexo products, we apologize in advance for any inconvenience that might occur as a result of unforeseen Merge developments. Nexo is here to help you navigate through this exciting transition period which culminates years of work towards a greener and more scalable Ethereum. Onward and upward, Vitalik and team!
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Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
