Binance, a cryptocurrency exchange, will stop deposits and withdrawals of Ether ( ETH) during September’s transition to the blockchain’s proof-of-stake Beacon chain.
The move was made by the world’s largest cryptocurrency exchange in terms of transaction volume in an effort to maintain stability during The Merge. It is expected to occur in mid-September 2022. Binance is the second major exchange to announce the suspension or withdrawal of ETH funds, after Coinbase in August 2022.
Binance announced that the exchange will be suspending transactions until it has two upgrades in place to facilitate Ethereum’s transition from proof-of work (PoW), to PoS. It was noted that a new token could be generated during a hardfork. This necessitated steps to reduce trading risk and protect user funds from price volatility.
Binance will stop accepting withdrawals and deposits for ETH tokens and ERC-20 tokens starting Sept. 6, during the Bellatrix consensus level upgrade, and ending Sept. 15, when Paris execution layer upgrade is scheduled.
Two scenarios were also suggested by the exchange. Scenario A assumes no new token is created. This scenario would see Binance reopen deposits for ETH and ERC-20 tokens, as a matter priority.
The second scenario is based on the possibility that the Ethereum chain could split into two different chains, resulting in the creation of a new token. Binance will use the ETH ticker to track the Ethereum PoS chain in this scenario.
Binance users will be credited by the exchange with the forked token of the minor chain in a ratio 1:1. This will be based upon a snapshot of ETH balances prior to the Paris execution layer upgrade scheduled September 15.
Binance indicated that withdrawals of a possible forked token would be supported. Details regarding distribution will be made in a separate announcement closer.
ERC-20 spot trading and ETH will not be affected by The Merge. However, users are advised to take precautions during price volatility in hard fork situations. Binance will also suspend ETH-cross and isolated margin borrowing from Sept. 14-16, while noting that ETH cross or isolated margin pair should be affected.
The USDS-M Futures Contracts and COIN-M-ETH Futures Contracts will also remain unaffected, but Binance indicated that it may take additional protection measures like adjusting margin tiers such as maximum leverage value or maintenance margin.
Once The Merge is complete, Ethereum PoW miners can transfer their hashrate to the Ethereum Classic Binance Pool.