Topic: Will exchanges control ETH after it becomes a PoS cryptocurrency? (Read 373 times)

Money talks so investors will prefer ETH over ETC even if the former becomes centralized. Those who really care about decentralization will have no choice but to switch to ETC or create a fork of their own. I'd certainly don't want to see another Ethereum fork because that would undermine its value. Just like how Bitcoin Cash, Bitcoin SV, and eCash took away a large portion of Bitcoin's value, the same might happen with ETH. It would be surprising to see another fork that would be the "best of both worlds" by incorporating PoW and PoS as the standard consensus mechanisms of the Blockchain. ETC could remain as the PoW chain of Ethereum, while the new fork would go hybrid.

Innovation is certainly happening in the crypto/Blockchain space, so it's likely the PoS version of ETH will last for a long time. Everything is open sourced these days, so changing the main ETH blockchain's consensus mechanism wouldn't matter anyways. Just my thoughts

As long as big investors are supporting ETH, it is hard for ETC to become the largest cryptocurrency in terms of market cap. Everyone will be riding the market as long as they are getting the profits even if ETH becomes centralized, then again they were centralized in making decisions even with POW which is evident with the split with ETC when there was a major hack.

Even in the case of switching to PoS completely without any major bugs, which is highly unlikely   and the market getting more centralized there will be investors pouring in millions, next four years is interesting as we could see some major changes in the market.

Create an infinite supply coin and then burn the coins and become a deflationary asset, how sweet .

Hmm, a friend once makes the exact statement you just do. She said ETC is the real ETH but the mistake I made that day is that I don't ask him why she said that and I don't ask her because I was not much interested in altcoin then.
What you said now brought back the question I ought to have asked then. Why is ETH the fork of ETC?
In the meantime, I am sure another fork coin will happen anytime soon from dev teams that like to take an advantage of the situation, especially from people like Richard Heart who withheld his crypto that was to take over dApps market.

I surely don't want to see another ETH fork emerge after the PoS upgrade. It will reduce the main cryptocurrency's value on the market. ETC may be the original blockchain, but it has a long way to go before it can come close to ETH in terms of market cap and mainstream adoption. It's possible ETH miners will switch to the ETC chain after the PoS upgrade in order to maintain their business. There is a lot of hype surrounding "The Merge", so it's possible ETH's price will "pump" for a short period of time. Big exchanges like Binance and Coinbase will profit massively if this happens. At least, the whole thing is open source. If ETH 2.0 fails, we can continue building on ETC for complete peace of mind. Just my thoughts

As far as I know, ETC is the one that is on the original blockchain, so ETH is the fork of ETC    Anyway yeah I agree, we just need to wait and see how this merging will affect the decentralization of ETH, and if another fork will happen, there is a lot of speculation but seeing it firsthand would be better than just hearing unfounded rumors about the effect of this merge.

Thank you for pointing that out, I haven't gotten the time to read to understand what was written on the ETH website due to real-life issues but I like the penalty prepared for any exchange that tries to manipulate the staking system, and it is indeed a strong defense.

I didn't say some exchanges will contest the merge but I believe will already be the exchange sites that supported the beacon chain (ETH2) some year ago which I believe they have already done the patch that's compatible with the ETH merge.


You have a point. Let's wait and see what will happen but ETC is also a fork of ETH.

That is inevitable if a coin that choose to be PoS, the dev wants their coin to be held and minimize the supply to increase the demands so the price will be less volatile. But on the other hand, generally coins are ranked by their marketcap, and if the dev wants to make it on the top ranks, they want good circulating supply on exchange, but then it will also means that exchanges have most of their coin and the project will be much more centralized.

I think, There's no telling how the crypto market will be affected, but there are a few factors that could mitigate the fallout. For starters, decentralized exchanges have been on the rise for the past year or so. One of these was even hacked for hundreds of millions of dollars in cryptocurrency, yet the market responded unfalteringly. Why? Because decentralized exchanges place power in the hands of the individual with no third party entity to siphon funds from multiple parties.

Totally agree with where you are going with this. ETH will just be in control of those big exchanges and probably institutions who has tons of ETH in hand who can become validators in the network. The who had less than 32 ETH have no say to the network and ETH will just be controlled or maybe suppressed in terms of its market price.

What made Vitalik decide it this way is just crazy and its like going back to the old system where everything is controlled by few such as the central banks. Luckily we still have ETC, but does ETC have an easier smart contract compare to ETH?

I'm well aware how PoS works. The consensus mechanism existed way before Vitalik Buterin announced it. Peercoin was the pioneer of PoS. Ethereum will only make it "better" by solving the "Nothing at Stake" problem. But even so, the network will be less decentralized because whales will be able to control the blockchain with their stake. Developers will be giving big exchanges the power to do whatever they want with ETH using customers' funds against their own will. We're beginning to see the market react with the announcement of the merge in a much more positive way for ETC than ETH itself. Miners will surely pump ETC's price to the moon, leaving PoS ETH behind in the dust.

Why would I want low gas fees and fast transaction confirmation times when the blockchain itself is controlled by whales? Decentralization is what has made Bitcoin and Ethereum a success so far. Take that away from them, and you'd get a flawed system that's no different than banks. No one knows what will happen after the Merge, so we can only hope for the best. Just my thoughts

This is quite possible, look at the existing POS tokens, most of them are quite centralized and controlled by the whales. The transition to POS is a big question mark about the future of this coin in the future.

Ethereum is known as the best altcoin because it uses the same POW algorithm as bitcoin so it is relatively decentralized, when switching to PoS, this decentralization will be lost. Honestly, I am also looking forward to this upgrade as it will help ethereum reduce gas fees and speed will improve but it will be worrisome when it becomes more centralized.

This will be a costly mistake if an exchange try this kind of scheme.  Remember it is written on the site of Eth that they can literally delete or remove the attacker out of the network making their  staked token destroyed.

There will be no exchange to contest the merge because they are out from the deciding panel.  All these exchanges do is apply patches that will make them compatible with the merge


Or possibly someone with huge influence can create another minable fork of ETH. 

Things like this are expected when ETH merge is executed but I believe every ETH holder should know by now that non-custodian wallets are the best to keep their ETH bag and there's already some movement of ETH out of the exchange site.

For the record, this ETH network merge ought to have been executed long ago and I believe before it takes place every exchange that supported or didn't support it will have notified their user. However, I believe it is something that every reputable crypto exchange will support.


Miners of ETH will flock to ETC after ETH merge is executed and I have once heard from a friend that ETC is the real ETH though I don't know or ask why he said that.
Having said that, I read the POS was said to make ETH more decentralized but time will tell if it will make ETH more centralized or decentralized.

the exchange of course have big chunk of eth 2.0 validator but it still not gonna centralized in my opinion because not all wallet are become the validator right, and the developer might already think about this one too so they have solution for this

The first thing you need to understand what is PoS? Then all of your questions will get resolved automatically.

What you see on an exchanger as staking has got nothing to do with the PoS directly involved with the coin.

If you want to get involved with the direct PoS then you will have to become Validator in the system. This is similar to becoming a miner when you are doing PoW. In case of ETH - PoS validator you will have to stake your own 32 ETH on the network which is around ~ $ 50,000 as of today's date.

Once you do that you will have to follow the software running process which includes: an execution client, a consensus client, and a validator.

However there is catch in this! To overcome flood of Validator or risking the fishy flow of whales for that matter, the Validators will be put into queue before they can join the network for PoS work.

Once they in, they start to receive the blocks from peers and validators need to do attestation of the block by voting it and thus confirming the transaction.

In addition to this, its not about who has staked a lot (in our case you might be saying whale with huge money); but it's all about how "FINALITY" happens. Its distributed work of many validators which goes through checkpoints to confirm the vote.

To overcome the reversible transaction Validator would need to loose his stake from the balance and is charged around one third of total staked supply (currently around $10,000,000,000)

Similarly PoS is protected from 51% where an attacker would need 51% of the staked ETH (about $15,000,000,000 USD).

Its not truly centralised, it's still distributed from validator to validator and to be just single validator they will need huge amount of money and still above algorithms will be in place to validate the vote of one validator.

Its highly impossible to reverse, collapse, 51% attacked! So no exchangers can not do that, they simply running proof of stake collaboratively with their users. They can't risk it.

Most of the information and above knowledge can be found on PoS ETH on official site.

It is also what I fear, upgrading ETH to POS will be good for transaction speed and reduce gas fees to compete with other blockchains but also very risky as ETH will no longer be a decentralized network, it will be easier for whales to manipulate ETH.

The ETH  is popular because it is decentralized and as secure as bitcoin, but this upgrade poses a major challenge to the ETH network. Let's wait and see if Ethereum will be able to maintain its position as the king of the altcoins anymore.

When there's money involved, you can expect the unexpected. Unfortunately, the ETH team's decision to sacrifice decentralization in favor of high-performance will cost the Blockchain dearly. It's a good thing the project is open source, else ETH's original vision would've been destroyed. With Ethereum Classic on the market, we no longer need to worry about the negative implications of the PoS upgrade on the main Ethereum blockchain. This fork aims to preserve the core ethos of decentralization.

With PoW in mind, ETC could become the decentralized alternative of Ethereum. My guess is miners from ETH will switch to ETC after the difficulty bomb "explodes". The latter cryptocurrency (ETC) is already experiencing short gains in price, so I can't imagine how high it'll soar after the ETH PoS upgrade is finalized. Just like exchanges manipulated the Steem blockchain's hard fork with customer funds, the same might happen with Ethereum. Going to full PoS is like giving power to the whales, while leaving the little guy out of the system. A hybrid approach (PoW + PoS) would've been better for ETH, but I guess developers aren't that interested in making it a reality. At least, people have a choice. As long as decentralization wins in the long run, nothing else matters. Just my thoughts

It's still too early to tell, but when it comes to reality, ethereum will become more centralized and this is something I think a lot of people won't want. Upgrading to ethereum's POS will somewhat increase network speed and gas fees, but it will also be more risky as it loses decentralization. I still don't know if this is the right decision or the mistake of ETH but I hope Vitalik Buterin and ETH team are well prepared for this, otherwise ETH may still crash.

Exchanges are most richest whales so they will hold lot of assets not only Ethereum.

Very little investors who can have 32 Ethereum at least to stake their Ethereum by their side. Smaller investors will have to join staking pools from exchanges. Latest months we have been witnessing lot of fiasco from Terra Luna UST, Celcius, Voyager, Three Arrows Capital and more.

I don't put my coin on exchanges for staking and put my coins into uncertain future. The PoS will make Ethereum more centralized.

It's possible ETC will become bigger and stronger than ever after Ethereum goes full PoS. We've yet to see how secure the new Blockchain will be, especially when PoS undermines the network's decentralization. If ETH fails, then ETC will take over as the world's second-largest cryptocurrency by market cap. Things would've been worse if the code wasn't open source for anyone to modify at will. There are rumors that ETH will be switching to PoS by the end of the year, so it's best to be prepared just in case. Just my opinion

You mean like large mining firms currently controlling Ethereum and Bitcoin? I can see absolutely no difference in this. PoW isn't any better system, poor people will still mine with pools. But as you are aware, if binance for example would try to control / attack ETH2.0, they would be done and so would the whole crypto scene for years to come. Also you are aware of slashing in PoS?

Because this all sounds like PoS fud coming from miners.

I don't think that the switch to PoS will have the negative effects that you have mentioned. I mean at the moment Ethereum is PoW and here the situation is also the same. There are huge mining companies located in China as far as i know that have a lot of hashpower which means they also have a lot of control over the network in that sense. I think that even after the switch to PoS Ethereum will be much more decentralized than most other PoS coins out there because ETH is just so popular and big that a lot of people are actually owning Ethereum and as you already said, eveyone can stake their ETH via pools or something.

If that is only the intention of bringing about such network integration and changes, I believe it never succeeds. I don't think it is necessary as for sure the community will not prefer to have that system rather than to remain as decentralized as possible. But can't hide the reality that exchanges now are becoming greedy, whales are doing it too making things have changed and they want ETH to fall into their hands and then controlled it.


I hope this is enough and the benefits spread, not just for the exchanges and whales.

Too early to tell but those are good points to be analyzed because we all do care for the network especially if you're also holding ETH. Well, I guess there's a reason why the merge and shifting has a delay.

There could be an insider debate that's happening behind the foundation and developers and that's why it's getting long before the full implementation on it. And if it's done, I guess they still have power to upgrade and fix necessary things if things have caught and gone bad.

ETH has been flowing out of exchange wallets into non-custodian wallets for a long time now. Who owns those wallets is anyone's guess, but it's a fact that ETH will become more controlled and centralized. I read in one of many articles about the future of ETH PoS that the value of ETH after the merger will be determined by investors and the community, and most likely the price will grow several times, and in the near future will update ATH. It's not for nothing that the big whales replenish their stocks. Judging by the developers' statements the wait is not long, they plan to merge on September 19.

Ethereum networks have become vulnerable through the many factors and development that have made Ethereum more centralized, moving from proof of stake to proof of work which many Bitcoin critics use to flag the energy and environmental impact of Bitcoin mining, this has led to many countries banning Bitcoin and so many other anti Bitcoin crusades all over the world.

Reading some information on POS from https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/.  Here is their explanation about the security of PoS against 51% attack.


Take note of the bolded part.  That would be a strong warning to any exchanges wanting to take control of the ETH network.  So I guess exchanges will not try to control ETH when it becomes POS.  

Damn, now I realized how centralized PoS ETH will be.

I don't regularly follow developments regarding Ethereum moving to Proof-of-Stake (PoS), but do you think Ethereum will become centralized after the consensus change on the network? Besides, if it becomes centralized, will the big exchanges like FTX and Binance be able to control the market? I think, even if it were to become centralized, it would be difficult for big exchanges like Binance and FTX to control it, this is because Ethereum circulation is quite evenly distributed across various exchanges.

What will the big Ethereum holders and exchanges do? Do you think they stake their coins and then attack the blockchain?  All major POS coins are centralized, but this does not prevent it from working. Anything can happen in the future, but first we need a new Ethereum price pump.

This is actually a good point. Knowing how CZ and Sam manipulate the whole crypto market with there own blockchain tokens, This PoS proposal for ETH will make there decentralized nature jeopardise. We knew that CZ and Sam only wants profit to themselves and just like wolf dress in lamb coat.

I really believe this will gonna give huge impact to Ethereum and probably more manipulation to come from these jerks crypto billionaire.

To be honest those big exchanges don't really want to control the ETH, they just want to destroy it because every exchange have their own coins and tokens also encouraging new projects coming up there because of low transaction fee but with ETH becoming PoS there will be a competitor for them and also big whales in charge so this os not going to be that easy to control meanwhile the users just enjoy the decentralized ETH blockchain while the others are completely centralized.

Centralization is a big issue among crypto enthusiasts and traders, but it seems unlikely that the exchange you mentioned will be able to control ETH after the PoS switch. If anything, I think more exchanges will offer Ethereum-based pairs, which is another good sign for decentralization. I also think that ETH is becoming more valuable and useful as a cryptocurrency with PoS instead. While I don't think ETH will "collapse" or anything like that, it will likely continue to drop from where it is now for quite some time.

The problem with exchange taking over as a stakeholder is that it creates a focal point of failure. If an exchange is hacked and our funds are stolen, there is absolutely nothing we can do about it, as we cannot remove your funds from the exchange once they have been deposited for staking.

No, only Bitcoin does that, but ethereum based tokens will go down with it.

It will really be bad if Ethereum will have a total collapse because it went to POS and then the big whales such as exchanges have total control over it.

Will be a disaster for Vitalik, his pet project becoming the biggest altcoin and then suddenly because players have control it went crazy downhill. So I doubt that Vitalik or any from the Ethereum devs will allow it, yes it might be as centralized as ever, but for sure it won't be as destructive as once we thought right now, just my 2 sats.

The released capacities will definitely switch to mining other coins, and today the profit received from mining Ethereum Classic is one of the big ones. An increase in hashrate in the network will necessarily entail an increase in network security and, as a result, an increase in the cost of ETC, which will again attract miners to transfer capacity to this network.

It will come into how the exchange has its own terms and condition or terms of service, currently, as far as I know there is no exchange that governs what they can or can't do in regard when dealing with staking/ed user funds.

If we look back at the Steem hostile takeover examples whereas big exchange is using users' funds to cast a vote, it indicates that there is no reason exchanges can't do that again in another means for ETH PoS. So that kind of scenario is prone to happen again until some exchanges stated clearly what they should or can do with user funds on their exchanges.

Greedy exchanges will want a piece of the pie, by using customers' ETH to guide the Blockchain in their own direction. It will be a conflict of interest, as exchanges will only approve/disapprove certain network upgrades and/or improvements if it benefits them. For what I know, money talks so you can expect such big players to "own" Ethereum at its fullest. We cannot say the same with the current version of Ethereum (which can be mined by anyone with a GPU). Vitalik Buterin has a strong presence in the project, so anything he says will be seen with good eyes by the community. It's unfortunate, since this will lead Ethereum towards full centralization.

At least, we'll have Ethereum Classic to preserve Bitcoin's original purpose (decentralization/censorship-resistance). Who knows if miners from ETH flock to ETC once the PoS merge is completed? Just my thoughts

I'm not too sure completely, but as we know centralization can make it so easy to play a role in the market, especially on a scale Ethereum clearly has a negative impact on cryptocurrencies. The logic is when the center under the Ethereum network also gets the same impact. This was not the main purpose for which Ethereum was originally created. Then it would make sense that Vitalik vehemently refused. The rest is about centralized exchanges which are much easier to control market movements, to me that would be very unwelcome.

I've been saying this for a long time now, and I will say it again. PoS will make ETH more centralized as whales and other big players in the industry will be able to participate in the network with their stake. Considering that exchanges hold most of a Blockchain network's cryptocurrency supply, changing to PoS will leave the average person out of the system for good. Of course, people will still be able to stake less than 32 ETH through staking pools. But it won't be the same as becoming a validator yourself (you won't participate in the network's consensus by staking your coins in a staking pool). A better approach for ETH would've been a hybrid PoW + PoS consensus algorithm. That way, everyone will have a final say over what new rules or decisions are made in the network. I guess Vitalik doesn't care about decentralization after all.

Do you think big exchanges like Binance, FTX, and Huobi will be able to control ETH after it becomes a full-fledged cryptocurrency? if not, why? Will there still be hope for ETH after the upgrade is finalized? What will happen if ETH collapses due to centralization? Will it take the whole crypto market down with it? Your input will be greatly appreciated. Thank you.