When this countdown reaches zero, most of the Ethereum ecosystem will move to the new proof-of-stake chain, save for a handful of disgruntled Ethereum miners sitting on million-dollar mining rigs.
Instead of stopping their operations, these miners announced plans for their merged fork and maintain a version of Ethereum’s proof-of-work (ETHPOW).
If this happens, you may have a replica of every existing digital token on the ghost town replica version of the old Ethereum chain.
Some of these tokens may have value, but most will not. If you’re thinking about selling them for a quick profit, do so with extreme caution!
There are many technical challenges you need to be aware of. This article provides a handy checklist of what to look out for. Here’s how to win an Ethereum PoW fork (if at all).
How to Win an EthPoW Fork
Image credit: Logan Craig
During the merger, a group of miners planned to fork and maintain a proof-of-work (PoW) alternative while the rest of the Ethereum community migrated to proof-of-stake (PoS).
The fork, dubbed EthPoW, is not ready to have a serious future yet, but it should grant ETH holders new ETHPOW tokens in a 1:1 ratio.
Interacting with ETHPOW can be extremely risky, so this Bankless strategy will provide a checklist through which you can safely navigate forks.
- Goal : Sell your EthPOW for ETH as much as possible
- Skills : Intermediate
- Effort : 1 hour
- ROI : Potentially increase your ETH amount
Learn the basics of merging
PoolTogether co-founder Leighton Cusack said a “merger” refers to the Ethereum blockchain changing its consensus mechanism. Instead of using “Proof of Work” (PoW), it uses “Proof of Stake” (PoS). what does that mean?
The combined tl;dr (summary) is as follows:
- Ethereum is migrating from PoW to PoS consensus.
- PoW uses energy ( in the form of computation) for security. PoS uses capital ( in the form of cryptographic tokens) for security. The former is obviously very energy-intensive, while the latter is very energy-efficient.
- The result is that Ethereum’s energy usage will drop by about 99% after switching to PoS.
- This merging into PoS has overwhelming community support, meaning that almost the vast majority of Ethereum community members and projects are migrating to the newer Ethereum chain and will not support any PoW forks.
Learn the basics of an EthPoW fork
Hudson Jameson , community manager at the Ethereum Foundation, said : “I am very skeptical about how much computing power they will gain if they launch after the merger. The computing power will be on other chains by then, and the value support of ETHPoW is already very fragile.”
The summary of EthPoW is as follows:
- Since July 2022, miners like Chandler Guo have accelerated plans to fork a PoW version of Ethereum during or shortly after the merger.
- Since basically all Ethereum activity is moving to the PoS chain, this EthPoW fork doesn’t have a significant value proposition – it’s a money grab masquerading as a permissionless blockchain for participating miners Maintain some form of dominance in a post-merger world.
- When it launches, EthPoW will “airdrop” ETHPOW tokens to ETH holders on a 1:1 basis. Attempting to sell these tokens could expose you to a replay attack , where an attacker “replays” your EthPoW transactions on the real Ethereum chain and steals your funds. See below for more information on this attack vector ⬇️.
Paradigm research associate Frankie said the ETHPoW team will soon run out of time to release the client binaries before the merge, and the closest thing they have done to changing the chainID is adding comments to the codebase.
A summary of the EthPoW ChainID situation is as follows:
- ChainID was originally introduced in EIP-155 to mitigate replay attacks between the Ethereum and Ethereum Classic chains; the ChainID for the former remained at 1, while Ethereum Classic moved to 61.
- At the time of writing, the developers of EthPoW still have not updated the forked ChainID from 1 in their codebase – which means that EthPoW is about to launch the same ChainID as Ethereum.
So, what is a replay attack? A replay attack is to take transactions from one network to another network for use. If you send someone 100 WETH on the merged Ethereum PoW fork, a replay attack can repeat this on Ethereum PoS without your permission.
- If EthPoW continues with this dangerous dynamic, it will create ideal conditions for hackers to conduct replay attacks.
? If a chain with a network ChainID of 1 starts, under no circumstances should interact with the ETHPOW fork. You may lose all your ETH. ?
- In other words, the first major item on this checklist is to check if EthPoW’s initial ChainID is 1 or the planned alternative 10001. If the creator chose the former over the latter, at no point should attempt to interact with the fork.
- Also, some DeFi projects like Maker’s Dai stablecoin are hardcoded to use a ChainID of 1 , which means interacting with their version of EthPoW will leave you vulnerable to replay attacks anyway. Check the project’s recent newsletters one by one to see how they are doing in this regard.
Some examples of interactions that might be replayed: On a forked Ethereum PoW chain, interact with any Maker contract directly from the same address you used on Ethereum before the fork.
Determine if ETHPOW is worth the trouble
- Let’s say EthPoW starts with a ChainID of 10001, mitigating most replay attack problems – and even then, is the value of ETHPOW worth the time and effort to claim tokens?
- This is the biggest problem right now! At the time of writing, ETHPOW IOUs are worth $29.30 per token.
- Additionally, the difference between the current spot price of ETH ($1,726) and the current price of ETH September 30 futures ($1,710) suggests that the implied price of ETHPOW was around $16 prior to publication.
- For many ETH holders, claiming each token worth $16 to $30 is not financially worthwhile, although by the time ETHPOW reaches exchanges, price discovery has the potential to push it above this range. On the other hand, the price of ETHPOW could drop rapidly as many people sell their tokens in bulk.
✅ Prepare your ETH stack
CoinGecko co-founder and COO Bobby Ong said the ethereum merger is planned for September 13. Christmas season is here again. ETH holders will soon receive airdropped ETH PoW tokens. What should you do to put yourself in the best position? Here are 7 steps you can consider to take full advantage of the merger:
- If EthPoW actually starts with a ChainID of 10001, and the ETHPOW token starts with some decent price action, it might be worthwhile to sell your ETHPOW for real ETH, USD, etc.
- To prepare to sell ETHPOW, you can get the best guarantee by putting your ETH in a non-custodial wallet that you have full control over before the ETHPOW fork. If you have ETH in your exchange wallet, the exchange may keep your ETH airdrop.
- Also, make sure you hold your ETH on Ethereum before the fork and not on L2 like Arbitrum. Only ETH on Ethereum can earn ETHPOW tokens on EthPow.
- Also, unwrap your Wrapped ETH (WETH) to ETH before the fork so you don’t have to try to unwrap your WETH on the EthPoW side once/if it goes live.
- Also withdraw your ETH from the DeFi liquidity pool, as any ETH you have in the liquidity pool will not be credited to ETHPOW at the time of the fork.
- Consider using a DeFi lending protocol to borrow ETH to maximize your ETH holdings before the fork; however, be aware that lending protocols such as Aave have suspended ETH lending amid a spike in lending activity.
Massive overnight rate movement in the Aave ETH market as the suspension of lending has been voted on (queued for execution later today). Last-minute borrowers coincide with redemptions, pushing utilization to >75%.
Choose your exchange
- Some exchanges, such as BitMEX, have announced plans to support ETHPOW trading.
- That said, it may take days, weeks or months for some exchanges to support ETHPOW deposits and/or account credits – make sure the exchange you log in has clearly detailed its support plan so you can Know what you can do and when you can do it.
Worried? do nothing
Now, there are many “what ifs” when considering whether you should try to sell ETHPOW.
The key thing to remember is that not playing is a viable strategy here.
If you can’t confidently complete the checklist above, “winning the EthPoW fork” may just mean abstaining and watching the situation on the sidelines.
The big question is whether this humble fork will launch with a ChainID of 1 or 10001. If it’s 1, then don’t interact with the fork, as the risk of a replay attack on your real ETH far outweighs the gain you get from selling it.
What is the best case scenario?
EthPoW starts at 10001 ChainID and you can deposit ETHPOW into a supported exchange and then cash out a decent amount of USD, or buy more ETH, or whatever works for you. At this point, however, it seems unlikely that the launch of EthPoW will go smoothly.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/what-should-i-pay-attention-to-before-and-after-the-ethpow-fork-and-how-should-i-operate/
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