Conversation: Arbitrage Opportunities Behind Ethereum Hard Forks

As the PoS upgrade of Ethereum is approaching, the original PoW miners are not willing to be abandoned by the Ethereum Foundation, and are actively preparing to retain the PoW chain and hard fork Ethereum. At 8:00 pm on September 8th, BitCoke exchange held an online AMA (ask me anything) event, and invited the EthereumFair project party satoshi_song, the ETH1 hard fork project party JACK LIAO, Planet Daily, and Kuaishou Toutiao, explaining that the miners insisted on hard fork Fork considerations, discuss the challenges and problems that PoS Ethereum may face, and the trading & arbitrage opportunities before and after this upgrade.

The guests participating in this online AMA are:

  • JACK LIAO : Miner, Founder of Bitcoingold lightningasic

Liao Xiang, an old miner, entered the blockchain industry in 2012, and has been involved in mining machine manufacturing, mining, and investing in related hardware wallets, ATM machines, and exchanges. In 2017, as the founder, established Bitcoinold. Liao Xiang is currently communicating with the Korean community as the coordinator of three different Ethereum PoW hard fork projects.

  • Satoshi_song:Ethereum Fair Dev

In 2019, the dogecoin Chinese community was launched, the defi seven o’clock community was launched in 2020, and the Ethereum fork was launched in 2022. He is also a veteran who started his business in Garage Coffee in 2011, and has been engaged in technology-related work in this industry.

Three years ago, the fork of Ethereum was prepared, and the POW public chain ClassZZ was launched. The goal is to cross-chain and carry the computing power of Ethereum for dogecoin.        

  • Xichen: Founder of KuaiChain Toutiao

As a media platform that has been in the web3 industry for 18 years, Kuaidi Toutiao has been helping the industry with cutting-edge information, in-depth investment research and brand services. He is also the brand director of MetaStone.Group, a risk hedge fund covering web3 primary investment and secondary asset management. At present, the fund size is nearly 1 billion US dollars, and the first-level investment in unity/metamask and other projects.

In 2018, Kuai-Chain Toutiao also participated in overseas mining. At present, it mainly makes first-level investment, focusing on infrastructure NFT Defi and other fields.

  • Loopy Lu: Daily Planet researcher

Planet Daily Loopy has been swaying in the secondary market, and DeFi Summer has entered the circle. Doing investment research in media/institutions, and also participated in two NFT projects as a consultant responsible for marketing.

Q sister’s question on behalf of BitCoke:

1. Many people are not particularly aware of the PoS upgrade schedule, please explain Leo and Loopy from Planet Daily

LEO: The roadmap for PoS upgrades released by the official foundation.

At present, it seems that the migration from the PoW chain to the PoS chain is officially completed on the 15th.

Conversation: Arbitrage Opportunities Behind Ethereum Hard Forks

2. The Ethereum Foundation has previously stated that it does not support hard forks. Why do miners keep the PoW Ethereum chain? What are the two considerations for supporting the hard fork?


First of all, the interests of the Ethereum Foundation and the miners of the hard fork are contradictory.

There are two reasons why I coordinated multiple teams to do the Ethereum fork.

The first upgrade of Ethereum is risky, there are three risks, one is the risk of code security; the second is the change brought about by changes in regulatory policies, it is possible that the regulator will regulate Ethereum as a security, then the Ethereum The entire ecosystem of the Square will collapse under the new regulatory conditions.

The risk is, who is the real public chain project, Pow and POS? I personally believe in POW, not POS. Why do you say that, the inventor of the first POS was BM, and he had two projects and both failed. Everyone advertises that POS saves power and TPS is high. These two things are not the core technical indicators of a blockchain, but a secondary technical indicator.Why do you say that, assuming that power saving and high TPS are the core indicators, then the blockchain should not exist, neither should Bitcoin, let alone Ethereum. Now our electronic payment methods, such as Alipay, can achieve 1 million TPS during Double 11, which is many times higher than that of the current Ethereum after the POS has been upgraded, let alone Power saving, everyone saves power the same way, they all use servers.

So I support the fork of Ethereum based on this reason to hedge the risk of uncertainty in the upgrade of Ethereum, but I am not against Ethereum to make this attempt or make this innovation. That is to say, he takes his plan A, and we take our plan B.

The second reason is that now the mining industry is probably such a group with money and people. The assets of the mining industry are 10 billion US dollars, and there are hundreds of thousands of miners in the world. So rich, someone is one of our customers. From the customer’s point of view, we have to provide services for everyone and customers. In this case, supporting such a forked project will inevitably have a certain commercial value. From the perspective of hedging risks and the perspective of customers, it is obligatory to support everyone in the POW fork project. This is the core reason why I am coordinating the three different forks.


First of all, in the early days of Ethereum, vitalik also focused on finding miners in China to promote the development of the Ethereum chain. From the birth of Ethereum to the present, how much effort did miners put on Ethereum, and how many batches of miners survived the fittest. The current miners’ retention of POW is unscrupulous, not only in the interest of retention, but also in the retention of the essence of the industry.

Since the development of Ethereum, POW, as the bottom layer, promotes the development of Ethereum’s market value of 100 billion US dollars in terms of security and decentralization. It is also POW that escorts Ethereum forward. Although the times need to develop and advance, this industry has its particularity. , that is, the only constant is decentralization.Performance is second, and there are many ways to replace it, but the essence of decentralization is that you cannot give up and compromise at will. And the essence of this decentralization, in my opinion, is that it has the characteristics of unconditional entry and unconditional exit.

In terms of security, it also tells you that you can attack me, but whether you can afford the cost and time, and the chain that has grown up in this kind of attack is more reliable for people to rely on.

At present, Ethereum to POS has basically completely abandoned POW. Then the first one with millions of dollars of miners needs to find a way out; the second time Ethereum and the ETC fork in 2016 are completely different. After the development of defi, web3, nft, etc., it already has a strong ecosystem that can operate independently; third, the current number of Ethereum addresses has exceeded 200 million, and the number of contract applications has exceeded 80 million, which will become unowned traffic.

Then there is a strong unmaintained flow and many ecosystems that can operate independently, and the support of a large number of miners at the bottom, then this Ethereum fork is the best way and route, and it can also reserve the fire under the future POS supervision for the industry.

Supervision should be aimed at applications or other centralized products, and the underlying chain should not be regulated. For example, soil can grow crops and poisons, and soil should not be regulated.

3. What plans do ETHF and ETH1 have in the follow-up ecological construction?


Regarding ecological construction, I think there are two directions that can be mainly considered. Not only ETH1, but also ETFs can refer to this idea. The first is to inherit these ecology of ETH on the original forked chain. How to activate them, of course, because each company has a different degree of close connection with the Ethereum Foundation, and their business models are different, there are some projects that naturally cannot support this forked chain, but there are some projects. , it can continue to operate on the forked chain, that is, these Dapps to be forked.

In addition, those projects that have failed to compete on ETH, or are in the second echelon, they must have this impulse, or it is necessary to go to pow to harvest this early traffic. Many third parties have contacted us and said that they will deploy their services and applications on the fork. In fact, these two parts can build an initial prosperous ecosystem.

At the same time, from a technical point of view, POW also has the opportunity to achieve this high performance. In 2019, I published an article and extended this POW proof-of-work. I named it the appropriate proof-of-work mechanism, or it can be called pow2.0. This article of mine was posted on the blog. , and interested friends can go and take a look. When applying for this patent in the United States, I want to put this patent into the defense patent room of the blockchain in the future, allowing everyone to use it freely, but if there is a third party to claim the right, we will use it and the third party’s patent. The patent claims to be a counterweight or an exchange.


At present, Ethereum Fair has released the latest test chain version after the merger of Ethereum Bellatrix, including the version of Ethereum Sentry Omega (v1.10.23). On bitkeep, the dex aggregation transaction of 1inch is currently being tested publicly. At the same time, there are already third-party R&D teams providing front-end products of makerdao, curve, benddao and opensea.

In terms of ecological planning, the most important thing at present is to run through the current important ecological projects on Ethereum. After all, there are tens of millions of ETHs in the ecology. These ETHs are equivalent to ecological minerals, and it takes everyone’s concerted efforts to dig out or exchange them. For example, makerdao can generate dai, which can be exchanged for usdt in curve through dai, and then 1inch to aggregate and trade forked candy ETF, etc.

In the early days, oracles such as chainlink were missing, so the prices of many oracles remained unchanged, and there were many arbitrage opportunities in the ecology, which also gave everyone a fair opportunity to participate in ecological mining.

The most important thing in ecological minerals is USDT. I believe that many people think that this fork of USDT will return to zero. Instead, I think that the USDT of the POW chain may be worth more than the USDT of the POS chain. Of course, this is just my speculation and does not constitute investment advice. .

Another big ecological plan is NFT. I think where the NFT community is, where the project is, not where the NFT project party is, where the NFT is. NFT will be better developed in the forked chain, not only the continuation of benddao, but also the continuation of more opensea. Although, for example, the boring ape has a share in the forked chain, it is also in the owner’s address, and the owner’s address is also required. Only unified transactions will generate transactions, so the NFT of POW chain has more playability.

In the future planning of the ETF, related NFT agreements such as mortgages and loans will be designed, as well as agreements for leasing, copyright, and multiple creation incentives. The last important ecological plan belongs to layer2. Layer2 has the property of infinite expansion. We are also in contact with more layer2 project parties. POW chain will be the best destination for layer2.

4. What problems and challenges may you face in the future when you evaluate Ethereum with PoS mechanism?


POW mechanism, I think there are two biggest challenges in the future, one is how to deal with regulatory policy changes, such as the US SEC or the US Treasury, after defining Ethereum as a security, then his entire valuation model is completely changed from today. The asset block chain track of the blockchain has changed to the traditional Internet financial track, and the entire ecology of everything above needs to comply with new regulatory regulations. There is a risk of this collapse in the entire ecology, and this is the first one.

Second, why support POW. It is because POW is an open, competitive and dynamic set of systems, while POS is a static and closed set of systems with strength. For comparison, POS is actually very similar to the landlord class in feudal society. In a closed system, it is impossible to introduce external competitive and dynamic resources, and it cannot achieve a state of survival of the fittest. It is possible that POS Ethereum will become a backwater. In a thermodynamic parlance, it becomes a state of increasing entropy. That is to say, Ethereum is very likely to repeat BM. Stepping into the footsteps of the two projects of the founders of POS companies, BitShares and Steemit, is going to zero.

It turns out that the EVM chain of POW is successful, or there are only one or two, then Ethereum has only one competitor, which is ETC. Now that Ethereum has changed to POS, its competitors have expanded infinitely. There are EOS far away, and all EVM-compatible chains close by, including BSC, including Solana, including Matic, including Heco, and so on. His entire playing field has completely changed. In the POS state, I think Binance is the most capable and successful, because Binance controls the off-chain traffic resources in one hand, and has its own son, BSC, in the other hand. flow.You see, Binance has done something recently. It stopped USDC and converted it into his BUSD. Then, the POS version of ETH will be forced to be converted to BSC and BNB. I don’t think it’s difficult, once Binance is strong enough to monopolize traffic, he will do it.


Judging from the previous development of Ethereum POW, the Ethereum Foundation has already made a statement. If it turns to POS and drives away the miners, then Ethereum will eventually become web2, a real company product.

After Ethereum is converted to POS, it may face overly enthusiastic supervision, and this supervision will expose the centralized nature of ETH POS, which will bring huge disasters.

In the Ethereum staking system, bribery will influence decision-making. In POS Ethereum, if more than 2/3 of the staked ETH is exceeded, an attacker can initiate the deletion of verified blocks from the chain. At present, the random number algorithm of Ethereum POS is still a black box state. If this is not open source, then Ethereum POS will be a completely centralized chain. If it is open, it may face the situation before EOS. In the future, there will be large pledge groups such as Liod and coinbase, which are effective in the short term, but will be a disaster in the long run.

Whether the industry exists or not depends on BTC POW alone. In a strong application chain, there must be a POW.

Then this time the Ethereum Fair will take on that role.

5. Why did BitCoke exchange fork USDT?


User friends should have noticed a series of actions by BitCoke on the Ethereum hard fork recently, including the listing of contracts for three forked coins. In order to support the hard fork, we specially launched the fork of USDST. After depositing USDT, users can click “Fork Exchange” to get 1:1 USDTS + USDTW

Stablecoins are the most important assets in the public chain ecosystem. Even though the issuers of centralized stablecoins such as USDT and USDC have indicated that they will migrate to the PoS chain dominated by the Ethereum Foundation, the general consensus is that PoW will still be on the Ethereum chain. Stablecoins are needed. Accordingly, in order to respect the opinions of users who have different attitudes towards the PoS upgrade, BitCoke launched the USDT (pre) hard fork to support users to freely exchange USDT for USDTS and USDTW “candy”.

With the PoS upgrade just around the corner, we are also hosting a special reward event for users who fork and redeem.The USDT you deposit can not only get 1 USDTS and 1 USDTW, but also a special NFT commemorative reward for this USDT hard fork event.


POW USDT is a stronger meme token than lunc dogecoin.


This is a question about why the forked token of USDT should be listed on BitCoke. So here’s my take on the matter. First of all, we divide the tokens issued by these DAPs of all ecosystems on Ethereum into five categories.

First of all, the first one is like a stable currency, which is endorsed by assets, which is a type; the second one is with certain financial attributes, such as Inchilker, which has loans and insurance; The third category is for services; the fourth category is such as oracles and UNISWAP; the last category is particularly fun, which is NFT, which is a non-homogeneous asset. He does not make any deliveries with any third party. After being divided into these categories, you can actually think about what kind of valuation we give him, or how to set his price, and then you can draw some very interesting observations in the future.

With assets as an endorsement, a token of this type that is 100% endorsed, he must only support one chain, because he only has one asset, he cannot back up two or three tokens, so he must only choose one. Chain to stand in line. The forked one, such as USDT, has no value at all? I think it still has a value, which may be relatively lower. Then I choose an object as a reference. LUNAC is fundamentally worthless at present, but LUNAC is still a multi-billion dollar project today.

As far as the forked USDT it will still have value, this is the first one. The second is the forked USDT, which may become a real ownerless stablecoin, because there are two models of stablecoins now, one is asset-backed, and the second is what we call algorithm stability Coin, but the algorithmic stable coin seems to have failed so far, will this unowned stable coin succeed? I think there is a possibility. Think about it, for example, all of our projects today, whether it is USDT or USDC, if he is required to be regulated by the US government one day and regulated like a bank, then the value deposited on it is now on it. It will be automatically mapped to these stablecoins that are currently unowned. Then there is the possibility that today’s USDTW will grow by a hundred times.

I would like to give an example, at the other extreme, if the forked NFT is valued, it has no collateral and does not deliver it to a third party. How do you think it should be valued? I personally prefer to use the traditional stock valuation model, which is ex-rights. Just like a stock, today I split the stock for you, one share is divided into ten shares, then in theory its price becomes 1/10. That NFT, I think its value should be split according to this amount. It turned out to be worth one ETH, split into two, that is 0.5 per person, and then three is 0.3 per person. I accept such a valuation model because for all users, his scarcity, his endorsement, etc., it is exactly the same.

Therefore, in the middle of everyone, you can take a look. According to his business model, his degree of risk, and the degree of ownership of his customers, he can come to give him a certain valuation. Therefore, BitCoke is the first exchange in the global exchange to list this forked token. I think the entire BitCoke team has a very deep understanding of the blockchain and has a very strong execution force. Only then can they become a global leader. The first exchange to support Ethereum’s hard fork token TOKEN.

There was a saying before that when it comes to tokens, the ecology under Ethereum will be a floating river of Ethereum, and it is impossible to fork. Then I think time will prove that the token on Ethereum is not the floating river of Ethereum, but a stimulus for fork. At the same time, for different types of tokens, there will be different story models and different project parties on the forked chain. It will do some corresponding deployments on the forked chain, you can wait and see.Then this round makes the right choice in the tide of ether fork, whether it is the fork team, the trading team, or the exchange, I think in the next four years, it will become a real , or it will take a big step forward, from the original second-tier echelon to the first-tier echelon.

6. What do the media think about the PoW hard fork of Ethereum, is it an extremely risky move?


I think it’s more risky. The first aspect is whether mining will be subject to policy blows in the future under the background that energy consumption is constantly being criticized. Ethereum currently consumes 93.97 terawatt-hours of electricity per year, which is equivalent to Kazakhstan’s total annual electricity consumption, and the resulting carbon footprint is equivalent to Sweden’s annual total. Creating an ordinary NFT on the Ethereum network under the PoW mechanism will bring 200 kilograms of carbon, and sales, auctions, transfers, and secondary sales after minting will generate a large carbon footprint. It is impossible to judge the pros and cons from a moral point of view. After all, almost every activity in life involves carbon emissions. The increase in total carbon emissions means that people’s lives are better because of consumption. Of course, more and more miners Switching to renewable energy is a positive thing.

The second aspect is whether economic incentives can recruit miners to support the network. After all, the value of ETH is not only the formation of consensus. Without sufficient ecological construction and richness, without extensive community support, and without capital injection into the project, will the economy of participating in ETHW mining increase? Whether the value of the coin can be guaranteed. Although it is different from previous forks, with reference to ETC, the challenges faced by hard forks are also very difficult.

Combined with the second point, miners who adhere to the spirit of decentralization contribute their hardware, electricity, and time to defend the rights of citizens in the digital world. If there are no sustainable economic incentives, some shaky speculative miners may be pulled out. On the one hand, the price cannot be sustained. Whether the computing power of the forked chain will be decentralized is more critical (currently, the specific data of the mining pools that support the fork is unknown and cannot be judged).


A milestone event in the history of Ethereum, this upgrade changed the consensus model of Ethereum from PoW mode to PoS, which is not only a technical upgrade, but also involves huge interest issues and community concepts.

The Ethereum merger forced the $19 billion POW miner to find another way. Although miners can contribute some GPU computing power to Web3 protocols such as Render Network, Livepeer, and Akash, it is difficult for these protocols to undertake all computing power.

From the data point of view, the total market value of GPU-minable tokens other than ETH is only 4.1 billion US dollars, accounting for about 2% of ETH’s market value, and ETH mining revenue accounts for 97% of GPU miners’ daily income.

The security issue of the forked currency is also worth considering, because this hard fork is not as simple as the ETH/ETC split. At that time, as long as you continue to mine and continue to run the same client software, this testnet fork Each of the code needs to remove the POS conversion logic, disable the difficulty bomb, and update the chain ID for protection.

Mining software may also need to be forked/updated. The upgrade of Ethereum is very near, and the time is very short. If there is a loophole in the underlying code of the ETHW fork, it will be easily attacked by hackers because it is too late to audit, resulting in a sharp drop in asset prices.


At present, the Ethereum Fair has completed the audit and released the binary client

The current P network and many exchanges are collectively referred to as ethw for ETH POW also had a twitter space with the ETF at the beginning and clarified the matter

So you can also think that ETFs are also ethw.

7. Does the PoS upgrade of Ethereum have any impact on ordinary users, and how to participate in the hard fork to profit?


Now that the DeFi TVL on the ETH chain is around $40 billion, where these assets go has become a big issue. Of course, this price figure is definitely wrong on the new chain.

At present, the token in DeFi on the new chain is likely to be locked in it forever. In addition to various protocols, there are various bridge-locked multi-chain assets. It can be said that the current ETH chain is already part of the entire multi-chain world, and it is difficult to deal with it alone. This is also the biggest difference from the etc fork.

At the beginning of the fork, the centralized stablecoins, project governance tokens and other ERC tokens of the PoW chain have essentially returned to zero due to the lack of value support. For example, the USDTW this time will become a large meme. Thanks to the smart contract and AMM mechanism, although it has no value, it still has a price, and there is a lot of room for arbitrage. In a short period of time, many PoW zero coins can be sold through DEX for more PoW ETH.However, this requires direct interaction with the contract, and there is a certain threshold for ordinary users.

Thanks to AMM, after this fork, the various coins of the huge Ethereum ecosystem can be said to have added a huge amount of various ERC coins to the entire PoW ETH market. They have no value but have a price and can be traded at the same time.


USDTW can refer to the ETH-PoW chain, participate in the defi ecology, or trade, and will become a new generation of meme coins in the future.


The design goal of PoS merging is to minimize the impact on dapp developers, and it is carried out with the principle of least damage. The application client switches to PoS without any sense, and ordinary users do not need to make any preparations and will not have any impact.

From the perspective of currency standard, it has no effect on ordinary users, and the ETH held will continue to remain the same ETH after the merger, without any ETH exchange for the merger. From the U standard, the volatility of the currency price will definitely increase.

I’ll be more direct and talk about the benefits

Users with high risk appetite have many options: holding some ETH (lending ETH in the lending protocol to increase risk exposure) can obtain hard fork tokens/you can also choose a liquid pledge service to pledge ETH/or observe the stETH Opportunity to exchange rates.

8. What are the changes from ETH to PoS? What will be the impact on the Metaverse and NFTs built on Ethereum?


The change is summed up as the official proposed scalability, security and sustainability;

They are:

– Prepare for the next sharding, enabling more transactions per second without increasing the size of the network nodes.

– The transition to proof-of-stake means that the Ethereum protocol is more resistant to attacks.

– Ethereum’s energy consumption will be reduced by about 99.95%, more energy-efficient, and will use less carbon to ensure more security; lower hardware requirements;

To be honest the impact of the Metaverse and NFTs built on Ethereum is going to evolve.

Ethereum is limited by low scalability, crowded ecology, and users are only a “small circle”. Based on our assumptions, the current adoption rate of encrypted users is only 0.3% (this is about the adoption rate of the Internet in 1995 ≈ 0.4%), but it also shows that we are in a very early stage. The PoS mechanism is one of Ethereum’s plans to achieve scalability. If the merger and sharding can support thousands of transactions per second and reduce the cost of use, making it easy to use in most parts of the world, then we can expect the next A pioneering internet too. In terms of DeFi alone, there are still 1.7 billion people in the world who do not have bank accounts. If the Ethereum system is carried and the transaction level is guaranteed, and the compliance problem of the blockchain can be solved, these people are potential open and financial users. .

In the NFT, Social, Game and even consumer fields, it is very likely that a new business model will emerge.

The complexity of applications and protocols at this stage urgently requires a more efficient and scalable underlying infrastructure. With the leap in underlying infrastructure technology and the openness provided by blockchain for development, it is foreseeable that the innovation diffusion curve of applications will be higher than any industry. Steeper and faster penetration. The interoperability and nesting of various applications and protocols creates network effects.

My view is that the Internet based on blockchain technology is subverting the development of the Internet in 10-year stages at a rate of technological innovation every 5 years.


Maybe nothing happened. Which chain NFT is in depends mainly on the decision of the project party or the consensus competition between the two parties.  

As the organizer, BitCoke actively supports and cooperates with the hard fork project parties. Currently, three hard fork currency contracts, ETH1, ETHF and ETHW, have been launched, and the USDT hard fork has been started simultaneously. Users can choose to exchange the deposited USDT for into USDTS and USDTW (candy coins).

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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