A fratricidal war is looming – The Ethereum network is about to abandon Proof of Work in favor of Proof of Stake. However, this transition is not to everyone’s liking. Thus, some miners are considering the creation of a fork that would maintain the Proof of Work as a consensus mechanism. We would therefore witness the birth of a new channel, entitled EthPow. Faced with the possibility of such a fork, what to do with its Ethers?
EthPow: a fork for Ethereum?
The update The Merge began on September 6 with the deployment of the hard fork Bellatrix. This will be followed in the coming days by the Paris update which will mark the abandonment of Proof of Work and the transition to Proof of Stake.
Obviously, who says end of Proof of Work, says end of mining on Ethereum. Faced with this fate, many minors have expressed their dissatisfaction.
This one is such, that some miners have said they are willing to fork the chain to create a version of Ethereum that would maintain Proof of Work. This upcoming fork is commonly referred to as EthPow within the community.
Obviously, this fork will result in the creation of a new token specific to the new chain. As always with a fork, ETH holders should be able to claim EthPow tokens at a 1-to-1 ratio.
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Faced with the approach of this event, more and more Internet users are speculating as to the best strategy to put in place to maximize this fork.
Thus, Bobby Ong, the head of operations of the Coingecko site, published a thread in which he goes over 7 steps to maximize his chances of obtaining EthPow. Let’s see together what his strategy is.
Properly store your ETH
Obviously, to obtain EthPow you must first hold ETH. However, they should not be stored just anywhere.
As Bobby Ong points out, the best strategy is to store your ETH yourself, preferably on a hardware wallet.
Thereby, storing your ETH on an exchange can make you miss out on EthPow. Indeed, trading platforms will be free to support the fork or not.
Therefore, not all platforms will necessarily distribute the token from the fork to its users.
If you still want to keep your ETH on an exchange, be sure to find out about the platform’s policy beforehand as The Merge approaches.
Repatriate your ETH to Ethereum
Since its inception, the DeFi ecosystem has transitioned from an ecosystem centered around Ethereum to a multi-chain paradigm. Therefore, a significant amount of ETH evolves out of Ethereum in the form of wrapped tokens.
As the potential fork approaches, nothing says that the operators of bridges and tokenization protocols support and distribute EthPow tokens to their users.
Therefore, to maximize your chances of getting EthPow, it is advised to repatriate its ETH to the Ethereum network.
” You will not receive any ETH PoW for your ETH held on Optimism, Arbitrum, Polygon, Avalanche or any other Tier 2 scaling solution. Move them to the mainnet before the merge to get the ETH PoW tokens. »
WETH ≠ ETH
In order to facilitate the use of ETH on decentralized finance protocols, an ERC-20 which represents Ether has been created, it is WETH.
However, it might be complicated to convert WETH Pow to EthPow after the fork. Thus, to make life easier, it is easier to convert your WETH to ETH before The Merge.
DeFi ETH
As is the case for ETH evolving outside of Ethereum, the situation of ETH evolving in decentralized finance is still unclear vis-à-vis the fork.
Thus, it will be up to each protocol to define, via its decentralized governance, whether or not they distribute EthPow tokens to their users.
“You will not receive PoW tokens for ETH which is used to provide liquidity. I would now withdraw my cash and provide it again after the merger. »
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More ETH to have more EthPow
As you have understood, the EthPow will be distributed according to the number of ETH held. Therefore, Bobby Ong is considering an increase in ETH borrowing on decentralized finance protocols.
Indeed, many users could see an opportunity to borrow ETH against stablecoins, to obtain more EthPow at the time of the fork and why not make a capital gain on the operation.
Arbitrage liquid staking
Lido is a so-called liquid staking service. Thus, for each ETH staked on the protocol, users receive the tokenized representation of their deposit in the form of stETH.
As The Merge approaches, it may be interesting to arbitrate the situation by buying or selling sETH depending on how the situation develops.
“I expect some to sell stETH for ETH to get the PoW airdrop. But if the sell-off gets too strong, you could buy stETH at a low price. »
Buy the rumour, sell the news
Once the fork has passed, the market could well ignite. Indeed, there is a good chance that many usersmassively buy ETH before the fork to resell them afterwards in addition to the generated EthPow. These massive sales could impact the price downwards.
“ETH will likely be bought in the hours leading up to the merger and will be sold immediately after. You can choose to sell ETH and take profit at that time. »
As many strategies as users
As we have seen, many strategies are possible as The Merge approaches. You should follow the strategy that best suits your skills and risk appetite.
Considering a simple, low-risk strategy may be the safest method when faced with an uncertain market.
As The Merge approaches, developers and white hats can win big too. Indeed, the Ethereum Foundation has quadrupled bug bounty rewards. These now reach the million dollars for any bug that would be critical for The Merge.
Don’t wait for The Merge to refine your investment strategy, it must be prepared upstream! Register now on the PrimeXBT platform to trade the king of cryptocurrencies (commercial link).