If you are an Ethereum user you are probably well aware of this, but we are getting closer and closer to the long-awaited Merge. Let’s dive in and see how this update will affect our protocol!

tl;dr: The Abracadabra team is confident that our protocol will continue operating on the new POS chain seamlessly and your user experience will remain unchanged. We recommend not interacting with Abracadabra on the POW chain to avoid replay attacks and oracle disruptions.

The Merge

The Merge is a major upgrade that is transitioning Ethereum from its current proof-of-work (POW) algorithm to a new proof-of-stake (POS) consensus algorithm called Casper. Casper is designed to improve upon some of the key weaknesses of POW, namely energy inefficiency and centralization risk. Under the new system, Ethereum users will be able to stake their ETH in order to validate transactions and earn rewards.

The merge will happen on a specific block number, but since each block has a variable block time, we can only estimate that it will happen between the 14th and the 15th of September 2022.

After this process is complete, the whole Ethereum chain will be converted to a POS chain, greatly reducing the cost of validating the chain and reducing net ETH emissions.**
**

In the last few months, some Ethereum POW miners and other entities have been discussing the possibility of hard forking Ethereum during this process, and creating a separate POW chain. At this moment, we do not have any plans to support any Ethereum forks and would only be able to ensure that the Abracadabra contracts work as expected on the main POS chain.

If you are interested in learning more about the Merge, we highly recommend you watch this amazing video produced by Finematics here.

How this impacts you

If the update is successful, nothing should change for Abracadabra and its users. Our protocol will continue operating on the new POS chain and your user experience should remain the same.

If you had a position open before the merge, you will still have that same position open after the merge.

We have already run multiple tests, and we are confident that our oracles, frontend, and backend will keep operating successfully on the new POS chain.

Possible POW implications

If the chain indeed happens to be forked, we strongly recommend NOT INTERACTING with Abracadabra on the POW chain. This may leave you vulnerable to possible replay attacks, as well as oracle issues. Let’s dive into these risks briefly.

If a POW chain is created and has the same chain ID as the main POS chain, then any token or transaction broadcasted to the forked Ethereum POW network can be replayed on the Ethereum POS network.

Additionally, Chainlink and its oracles only guarantee operations on the new POS chain. Given that our protocol relies heavily on Chainlink oracles, our contracts would be affected by any kind of Chainlink oracle disruptions on the POW chain.

Overall, not interacting with Abracadabra on the POW chain is the safest course of action.
In the hours following the Merge, we would suggest that you monitor the price action of your collateral closely, as it may experience extreme volatility.
**

We understand this situation may be causing you some stress, but as long as you avoid using the POW chain, you should not be affected by forms of replay risk. If anything changes, we will be sure to update you.

**
*We are ecstatic for what appears to be the start of a new era for the Ethereum community! The Merge is finally coming! See you on the other side, wizards!