Ethereum is all set to transition to a proof-of-stake (PoS) network by Sept. 15 to 16, which will see the end of its current proof-of-work (PoW) consensus mechani and eliminate mining from the ecosystem.
In light of such a significant upgrade, Ethereum’s PoW proponents, especially its miners, have decided to keep the PoW chain alive. EthereumPoW, comprising the core PoW team, has recommended that Ether (ETH) holders withdraw their assets from liquidity pools (LPs) at places such as Uniswap, SushiSwap, Aave, Compound and other decentralized exchanges (DEXs).
The terminal total difficulty has been set to 58750000000000000000000.
This means the ethereum PoW network now has a (roughly) fixed number of hashes left to mine.https://t.co/3um744WkxZ predicts the merge will happen around Sep 15, though the exact date depends on hashrate. pic.twitter.com/9YnloTWSi1
— vitalik.eth (@VitalikButerin) August 12, 2022
The core team said they would temporarily freeze EthereumPoW (ETHW) tokens in certain liquidy pools of DEXs and lending protocols to protect user assets after the hard fork.
The core team believes that immediately after the Ethereum PoW hard fork, especially for the first several blocks, users’ ETHW tokens deposited in liquidity pools will be swapped or lent out by hackers and scientists using deprecated and valueless Tether (USDT), USD Coin (USDC) and Wrapped Bitcoin (WBTC), which would “create a huge mess to the whole network and community.”
The core team said:
“ETHW Core has to make the hard decision to temporarily freeze certain LP contracts to protect users’ ETHW tokens until the protocols’ controllers or communities find a better way.”
The team also said freezing would not be applied to the staking contracts that only involve a single asset, such as the Ethereum 2.0 deposit contract and Wrapped Ether (WETH).
The idea of freezing users’ assets without their consent didn’t go well with many in the community. One user reminded the core team that “freezing hardcoded LP smart contracts into the ETH clients is definitively not decentralized.”
Converting ETHW into a slow, centralized chain, which has no market fit.
If you want to protect users from bots draining ETHW from LP, then other measures have to be taken.
Uniswap + AAVE + Compound have 1.8M ETH on their pools. Around $108M of implied value for $60 ETHW
— Alberto Rosas (@albertorosasg) August 17, 2022
Others went as far as to call it a scam and recommended reporting the Twitter account claiming to be the core EthereumPoW team.
I recommend reporting this account as a fake. There is no “official” ETHW core team, and they are proposing a rushed changed to code which freezes contracts as selected by individual people. No EIP discussion or vote or anything. This will likely just create a 3rd fork. Scam. https://t.co/4bORc2bTZP
— Tommy Genesis (@0xTommyGenesis) August 17, 2022
The PoW hard fork has also found support from a prominent Chinese miner, Chandler Guo, who claims to be behind a 51% attack on Ethereum Classic.
I am Chandler Guo, a 51% attack on Ethereum Classic (ETC) is coming with my 98G hashrate https://t.co/9VM6vPa8CS
— Chandler Guo (@ChandlerGuo) July 24, 2016
The majority of crypto exchanges and stablecoin issuers have thrown their support behind the upcoming PoS-based Ethereum network. However, various crypto exchanges have stated that if a forked PoW chain gains traction, they would be in favor of listing the forked token as well, depending on the demand from the community.
The ETH mining sector is worth $19 billion, according to an estimate from crypto analytics firm Messari. With billions of dollars of infrastructure on the line, it’s understandable why miners would favor a hard fork, given that mining other PoW tokens such as Ethereum Classic (ETC) or Bitcoin (BTC) won’t be as profitable.
Related: Ethereum devs confirm the perpetual date for The Merge
Experts believe a forked PoW Ethereum chain won’t be as profitable either, as most of the community will shift to the new network. Kent Barton, tokenomics lead at ShapeShift DAO, told Cointelegraph:
“While the free market will ultimately decide, it’s likely that following some initial price discovery (and a potential opportunity to sell these forked tokens), these PoW forks will die off. A strategy that’s more likely to succeed is mining on other PoW chains such as Ethereum Classic.”
Ethereum co-founder Vitalik Buterin has been critical of the PoW fork as well, calling it an act of greed from a few outsiders. He recommended miners shift to Ethereum Classic as well.