As most of the Ethereum ecosystem transitions to the new consensus mechanism over the next 24 hours, a group of miners plan to fork the blockchain. They want to continue the old Proof-of-Work (PoW) chain and all Ethereum tokens on the new Proof-of-Stake (PoS) chain are copied to the breakaway blockchain.
According to the group’s Twitter channel, the whole thing should take place just 24 hours after the merger. The exact time will only be announced one hour beforehand.
This would mean that the forked PoW blockchain would start validating transactions 2,049 blocks after the Ethereum merge.
Ethereum Hard Fork: Risky Interaction
Those wishing to use the rogue chain should be aware of the risks involved. Since the forked PoW blockchain will have its own ETH token, some users will most likely speculate on a price increase. If you previously held ETH in your wallet, you will get the new coins as a gift and can resell them. A few exchanges have already announced their support for the PoW coin. But if you want to sell the coin immediately after receiving it, you should know what tax hurdles you have to face. A tax drama may even be looming here.
In addition to the ETH coin, all tokens present on the Ethereum blockchain are also copied to the split version. It is not yet possible to predict exactly whether these will retain their value on the split blockchain. But whoever sells them could become a victim of a “replay attack”.
In the replay attack, the action of the PoW chain is reflected on Ethereum’s PoS chain. Therefore, there is a risk of losing certain tokens on the PoS chain by selling them.
The reason for this is that both have the chain ID 1, so technically they are the same. The PoW group has not (yet) changed the code for their forked blockchain in this regard. Unlike the already existing Ethereum hard fork “Ethereum Classic”, with the chain ID 61.
If this remains the case after the merge, it is advisable not to touch the POW coin. Of course, the temptation to do so is great if the coin increases in value.
Worth the effort?
Anticipating the merger, some traders on DeFi platforms have started borrowing ETH to get even more PoW coins. However, whether it is worth touching the tokens at all will only become clear in the coming weeks. What is known is that futures markets are pricing the PoW coin at just under $40, a far cry from the current roughly $1,600 per token for Ethereum. While there is potential for a little more movement upside. The coin could just as well crash as soon as it becomes tradable.
The current Ethereum token does not only get its value from its consensus mechanism, but from its use as a means of payment in the entire ecosystem, for example in the DeFi sector. However, significant projects in this space have already denied their support for the fork and have only committed to the PoS chain, particularly stablecoins. The split chain, like the split Bitcoin blockchain “Bitcoin Cash”, could therefore quickly degenerate into a ghost town.
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