Chainlink Confirms Support To The Merge But Not Ethereum Hard Forks; Worries About 'Increased Risk'

Chainlink, the decentralized node network that utilizes oracles to offer data from off-chain sources to blockchain smart contracts, confirmed it would support Ethereum's transition to proof-of-stake or The Merge, but not its proof-of-work (PoW) hard fork.

In a post about Ethereum's transition from proof-of-work, Chainlink confirmed that it would stay operational during and after the Merge. However, it disclosed that, unlike others, it would not back the forked versions of the blockchain.

"The Chainlink protocol and its services will remain operational on the Ethereum blockchain during and after the Merge to the PoS consensus layer. Users should be aware that forked versions of the Ethereum blockchain, including PoW forks, will not be supported by the Chainlink protocol," the decentralized blockchain noted.

It also recommended developers and dApps pause smart contract operations if they are not sure of their "migration strategy" about the Merge, not only to protect users but also to "avoid unforeseen incidents." According to Chainlink, decentralized apps on Ethereum's forked versions, including proof-of-work forks, could "behave in unexpected ways" because of app-level problems that might bring "increased risk" for end users.

The decentralized blockchain said its decision is "aligned with both the Ethereum Foundation and broader Ethereum community's decision, achieved via social consensus." Vitalik Buterin, the Canadian programmer and co-founder of Ethereum, has some choice words for people and cryptocurrency platforms supporting the EthereumPoW hard fork.

Over the weekend, the crypto genius said Tron founder Justin Sun, Huobi and Poloniex were "simply trying to make a quick buck." Like Chainlink, Buterin believed that the fork would have some issues and that "people responsible must mitigate those problems."

The Ethereum co-founder hopes "whatever happens doesn't lead to people losing money," adding that he is not expecting that it will "have substantial, long-term adoption."

Ethereum developers have already scheduled the final test for the completion of the Merge and the community is anticipating the full implementation sometime in September. The team only needs the Goerli/Prater testnet deployment to complete the transition, which according to developers will take place sometime between Aug. 6 and 12.

Developers hope to launch the Merge on Sept. 19 if the Goerli testnet runs smoothly. When this happens, all Ethereum activities will be transferred from the proof-of-work Beacon chain.

Chainlink's position about Ethereum's hard forks came on the heels of the company's announcement on its plans to grow its oracle network and reinforce its security through a new token staking system, which could come out sometime in the second half of 2022. The staking system is almost similar to proof-of-stake blockchains, which after its implementation, would lock up LINK tokens as collateral.

With the staking mechanism, "crypto rewards and penalties are applied to help further incentivize the network's proper operation," Chainlink explained. The LINK tokens can be taxed or slashed if a node misreports data and these slashed tokens will be distributed to honest validators as rewards.

Staking is a crucial moment for the company to indicate the start of the Chainlink Economy 2.0 evolution for the decentralized blockchain's "long-term security and network economics." The mechanism is designed to build a strong foundation and reduce the risk for participants.

The team, however, anticipates that its long-term benefit would revolve around scaling Chainlink "into a global standard with a growing and sustainable user base, which in turn offers the greater opportunity of rewards for stakers who increase the network's crypto economic security and user assurances."