Ethereum is moving to Proof-of-Stake, but miners are planning a Proof-of-Work fork. A group of anonymous developers backed by many of Ethereum’s leading miners are expected to perform a hard fork of the Ethereum blockchain after next week’s merger, keeping a version of the network running with the current Proof-of-Work (PoW) consensus mechanism while the main blockchain moves to Proof-of-Stake (PoS).
The fork, commonly referred to as ETHPoW, will share the same transaction history as the main Ethereum network, but will begin creating its own blocks after the launch of The Merge update. Since the PoW fork starts from the state of the Ethereum network before the merge, all token balances and smart contracts will also be transferred. This means that all ETH holders on the chain will have an equal balance of ETHW on the ETHPoW chain. ETHW will only originate from the PoW fork and will represent an entirely different asset than the original ETH on Ethereum.
For many Ethereum supporters, the planned PoW fork has little value as an investment. Virtually all of the deFi, NFT, and network infrastructure protocols have publicly announced that they will support the PoS chain, leaving the PoW fork in a difficult position. Upon its launch, decentralized exchanges on the fork will likely cease to function, and centralized stable currencies like the USDC and USDT will become worthless, potentially causing mass liquidations and breaking many DeFi protocols.
Although the PoW fork will have to start from scratch, there is one token that will likely retain some value – ETHW. Like the 2016 DAO hack fork that gave birth to Ethereum Classic, the PoW fork could also have loyal supporters who will continue to develop it, creating demand for its token. Conversely, those who don’t believe the fork will go anywhere might want to sell their ETHW tokens after the merger to pocket some extra gains. But what’s the best way to make sure you get your ETHW? Which exchanges are planning to support the Ethereum PoW fork? Read on to make sure you get the most out of the PoW merger and fork.
The easiest way to play the merger is to deposit ETH on a centralized exchange that has announced that it will support the PoW fork. The list below is not exhaustive but covers the major exchanges that have issued statements:
- Poloniex has already listed a replacement ETHW token and will list and support exchanges for the ETHW fork when it launches, including crediting users’ accounts with ETHW in a 1:1 ratio with the amount of ETH they hold.
- Binance, MEXC Globaland Gate.io will all support an ETH PoW fork and also plan to credit users’ accounts with ETHW in a 1:1 ratio with ETH.
- OKX will list and support exchanges for an ETHW fork.
- BitMEX has launched ETHPOWZ22, a linear ETHPoW futures contract with a USDT margin.
- Coinbase, FTXand Kraken have stated that they will review an ETH PoW fork like any other asset and list it for trading if necessary.
Currently, it seems that Poloniex, Binance, MEXC Global and Gate.io are the safest to give users their ETHW equivalent after the merger. Of these, Binance will likely have the largest market, as it is currently the leading centralized exchange in terms of trading volume.
However, those who are unable or unwilling to deposit their ETH on one of these exchanges prior to the merger have another option. Holding ETH in a non-custodial Ethereum wallet guarantees that your address will receive ETHW during the new PoW fork.
A non-custodial wallet should be the fastest way to access your ETHW after the merger. While users of centralized exchanges may need to wait hours or even days for their ETHW to be paid into their account, taking control of your ETH funds is the safest way to ensure that you have access to your PoW fork coins.
However, the trade-off is that accessing the new PoW chain requires some technical knowledge and could expose users to risk. Those who take this approach will need to add the PoW network to their EVM portfolio upon launch. In MetaMask, you can do this by clicking on the network at the top of the browser extension and selecting “Add Network“. You’ll then need to enter the ETH PoW chain name, RPC URL, and chain ID (these details will be announced after the PoW chain is launched). The process is relatively straightforward, similar to adding RPC for other Ethereum-enabled channels like Polygon or Avalanche.
Another consideration for those who plan to hold their ETH themselves before the merge is consolidation. If your ETH is locked into a smart contract, on a tier 2 chain or staked by a protocol like Lido, it will not be associated with an ETHW on the PoW chain. To maximize the amount of ETHW you will receive, it is advisable to convert your assets to normal ETH and keep them in your portfolio during the period before the merger.
While using a non-conservative portfolio will ensure that you receive PoW fork coins, the limiting factor will be finding a marketplace to sell them after the Merger. Since all tokens on the forked chain, except ETHW, will almost certainly be worthless, using decentralized exchanges is out of the question. Those who want to cash out will still have to wait for a centralized exchange to open ETHW deposits.
To make sure you’re ready, consider creating accounts on the various exchanges that will support ETHW in advance. That way, those who want to can transfer their ETHW at the earliest opportunity, and potentially sell it at a higher price.
Finally, it is critical to understand the risks associated with the merger and any new PoW fork. A frequently mentioned hazard Is that if an Ethereum fork is started with the same chain ID as the main PoS chain, transactions could be “relayed“. That is, transactions signed on a fork chain could be validated on Ethereum’s main PoS chain, allowing for new scams that could potentially empty users’ wallets.
While such scams are possible, it is unlikely that the PoW fork would be launched with the same chain ID. However, unscrupulous individuals may try to launch other forks intended to steal users’ PoS ETH. Be very careful before signing transactions on an ETH fork; if in doubt, do nothing. It’s better to miss a few hundred dollars than to lose your entire ETH stack.
The latest estimates are that the merger will take place between September 13 and 14. If you plan to send ETH to a centralized exchange or your own portfolio, be sure to do so well in advance. Most exchanges plan to halt ETH trading a few hours before the merger to ensure that no user funds are lost, so don’t wait until the last minute.