The company explained that this move is to secure tokens in case of a chain split.
In an announcement made on Monday, September 5th, Binance stated it would conduct a wallet suspension for Ethereum on several networks pending the “Merge.” The affected tokens include ETH and WETH.
Why is Binance Halting ETH Deposits and Withdrawals During the Merge?
With the long-awaited merge quickly approaching, various crypto platforms are taking steps to ensure that the transition completes as smoothly as possible. Earlier today, FTX made a similar announcement to that of Binance.
Both FTX and Binance explained that the suspension of ETH deposits and withdrawals would be carried out to ensure a smooth transition and protect users against possible losses. Trading of Ethereum will not be affected by the suspension on either platform.
Binance clarified that the affected tokens are ETH on the Arbitum and Optimism networks and WETH on the Ronin network. The suspension will start on September 6th—Tuesday—and will last until all the networks are deemed stable after the Merge.
Binance also explained that in case of any discrepancies between the English and non-English versions arise, the English one will be taken as valid. Any deposits made before the merge is complete, and after the 6th will not be credited.
ETH Merge Explained
Ethereum’s Merge is possibly the biggest crypto event of 2022. It has been postponed multiple times, and thousands of dApps have been preparing for it since the Spring. The Merge will effectively sever ETH’s reliance on miners as it will transition the token from a proof-of-work model (PoW) to a proof-of-stake one (PoS).
This transition is expected to reduce ETH’s energy consumption by around 99% and has already seen gas prices plummet following the successful Goerli test in August. This major event is still subject to some uncertainty though.
Ethereum’s miners have announced that they will attempt to split the chain to maintain their PoW business model. Furthermore, the Merge has not been priced yet and it isn’t completely clear what the effects will be on the value of the world’s second biggest crypto. While most believe that the effects will be positive, many still caution that Ethereum gains might be overstated ahead of the big event.