There’s a high chance you came to crypto only a few months ago. Therefore, you might not even know what a fork is. Surprisingly, forks haven’t occurred as much during the previous cycle as they did in 2016-2019.

A blockchain is a stream of updates to a database. Each block is an update.

Each database has rules. For instance, one of the core rules of Ethereum is that nodes should do some computations to push updates to the database. This computation is resource-intensive and is why people buy expensive video cards. Ethereum’s rules, however, are about to change.

Changing the rules doesn’t necessarily mean that the original network stops. It merely means that another chain is being created. In the case of Ethereum, this new chain shares its history with the “old” chain. The future updates, however, are only compatible with the “new” database.

The Proof-of-Work (PoW) chain will continue to live as long as there are interested parties to keep supporting the “old” database and push updates to it. Like any blockchain, it can’t be stopped otherwise.

Several ETH miners led by Chandler Guo and prominent crypto personalities like Justin Sun have expressed support for an Ethereum PoW. These people are ready to keep the “old” database going.

If you haven’t heard about The DAO fork, it’s time to learn about it. 

What does it mean for you? Well, the most immediate answer is that you will have twice as many “ETH” as you do now. Remember, Proof-of-Stake (PoS) Ethereum will start from some historical state with information about your coins. But that’s not all. 

ETH on the Ethereum PoW chain will get a new name, which seems to be ETHW. Its price won’t be the same as ETH on Ethereum PoS because it has the minority support of the Ethereum community. Still, you can consider it a “free airdrop.”

We can draw parallels between the upcoming fork and the previous two major forks of Bitcoin and Ethereum to assume the price action of ETHW. 

BCH price fluctuated between 5% to 25% of BTC value in the weeks following the fork but eventually dropped to less than 1% of its value. Source: CoinGecko.

ETC price fluctuated between 8% to 30% of ETH’s value in the weeks following the fork but eventually dropped to around 2% of its value. Source: CoinGecko.

Initially, ETHW may gain some traction due to promotion by the interested parties such as miners and centralized exchanges. Exchanges make money from people trading regardless of what is being traded. Thus, they want to add new coins, especially the ones with a high level of interest from the community. They don’t care about the asset’s price when they add it.

Given the near unanimity in Ethereum’s community for transition to PoS, the Ethereum PoW chain will likely fade into obscurity. Ergo, selling ETHW for ETH early will likely be a good idea,

even if it somehow manages to maintain value for longer than expected. Nobody became poor from taking profits.

How do I access ETHW?

If you want to access the ETHW, you’ll need to switch your wallet’s network to Ethereum PoW from the Ethereum mainnet or use a centralized exchange that supports both chains.  

Ethereum PoS will be the default chain on popular wallets like MetaMask, Trust, or Coinbase wallet. Thus, to make them work with Ethereum PoW, you will need to use a service provider that supports the network.

I expect that EthereumPoW would be such a service provider. However, if nobody sets the service up in time, you won’t be able to use a wallet like MetaMask for moving ETHW. Try using special services like this one to add network communication data. You can use Ethereum PoW or similar queries to find and add the network in one click.

The two popular providers that process the majority of Ethereum transactions are Infura and Alchemy. They have relationships with the Ethereum Foundation and have decided to delist testnets deprecated by the Foundation. These providers are unlikely to support Ethereum PoW, so after the Merge, your MetaMask will talk to Ethereum PoS by default.

As you can see, using a decentralized wallet to play the Merge is cumbersome. Therefore, you might like to opt for a centralized exchange.

So far, Justin Sun has led the launch of two new tokens on the Tron blockchain: ETHS and ETHW, representing Ethereum PoS and Ethereum PoW chains. Current ETH holders can get 1 ETHS and 1 ETHW. After the Merge, one can exchange these tokens 1:1 for ETHPoS and ETHW. These tokens are traded on Poloniex and MEXC.

The market price of ETHW trading on Poloniex is 0.04 ETHS. Source: Poloniex. 

BitMEX has introduced ETHW futures contracts. Other prominent exchanges such as Huobi and OKX have also expressed interest in adding ETHW. 

If you want to gain access to your ETHW tokens early, you can send some of your ETH to one of the exchanges mentioned above. The platform will automatically add the ETHW balance to your account, and you’ll have the advantage of being able to sell as soon as the Merge occurs.

What will happen to liquidity and lending positions on Ethereum PoW?

The currently available DeFi applications on Ethereum PoW will stop working correctly because teams will no longer maintain them, and critical ecosystem components will stop working or lose value. 

Chainlink, the most used oracle network, has expressed support only for Ethereum PoS. Top-tier applications like Aave and Synthetix Network rely on Chainlink to do business. Without functional oracles, these applications wouldn’t be able to get correct price data, which would break their business logic.

Replacing an oracle sounds like a possible fix. But the projects are controlled by teams or governance modules. While some teams may continue operating on the “old” chain along with on Ethereum PoS, the top-tier dApps are likely to stick only to the “new” one. 

More importantly, stablecoin issuing companies such as Tether and Circle vouched for Ethereum PoS. Thus, the USDC and USDT existing on Ethereum PoW will be worthless. In that case, liquidity providers will end up with bags of worthless tokens, and lending platforms will become insolvent as their collateral will go bust.

As you can tell by this point, DeFi on Ethereum PoW will be a disaster, at least right after the Merge.

What will happen to NFTs on Ethereum PoW?

After the Merge, the world will have two sets of Crypto Punks and Bored Apes. However, in all likelihood, popular marketplaces like OpenSea won’t support the ones on Ethereum PoW. Technically, some teams may spin up user interfaces on top of the existing contracts, but those wouldn’t likely be competitive in terms of convenience.

Moreover, owners of NFT projects can often remove and change the content of their collections by swapping some data in the contracts. They can purposely wipe their Ethereum PoW-based collections to make them worthless.

Overall, the functionality across Ethereum PoW will likely be severely disrupted right after the Merge. A low-risk way to make money from this is by treating the Ethereum PoW chain as a source of free airdrops.

Therefore, the best play is trying to sell everything, including ETHW, at the highest possible prices. To catch them, you must actively monitor social media for sentiment and keep track of the necessary tools’ development (remember MetaMask communication services?). If you don’t want to do it, dumping ETHW to ETH on a centralized exchange straight after the Merge is an acceptable strategy.

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