What are ETHW and ETHS? Notable information about ETH Hard Fork and pre-event The Merge 2022
What are ETHW and ETHS? Notable Information about ETH Hard Fork and Pre-Event The Merge
In today’s article, Coincu will find out with you in detail:
- The Merger Pre-Event ETH Background
- What is the concept of ETHW and ETHS?
- What will happen after The Merge?
- Notable information before The Merge takes place
Explore more: Ethereum The Merge: Origins, Contexts, and Misunderstandings of The Merge 2022
The Merge Pre-Event Scene
The Merge, the most anticipated event in the cryptocurrency industry will successfully take place on September 15, 2022.
This historic event will see Ethereum drop the PoW consensus mechanism and move the entire DeFi array into a new home with PoS consensus.
Over the past few weeks, the Twitter community has had a heated debate about a PoW fork of Ethereum that will coexist with Ethereum PoS after The Merge event.
The reason is simple, The Merge will bring Ethereum from PoW consensus to PoS. This “smashed the rice bowl” for the past 7 years of miners.
Discontent and the pursuit of profit are still there, many components have protested and continued to exploit the Ethereum PoW “gold mine”.
Since then, the whole market is facing the prospect of the parallel existence of 2 Ethereum PoW and PoS chains after The Merge.
Consequences of continuing to Fork an Ethereum PoW
- As a Fork of Fork (ETH is Fork from ETC and ETHw fork from ETH), these chains often lack clear direction, do not store real value, are and unstable, so they are vulnerable to mining attacks.
- As a lifeless clone, ETHw will not receive service support from veteran DeFi platforms like Chainlink Protocol.
- Many Ethereum dApp assets are completely unforkable as it is pegged by assets outside the system, so most dApps forked on ETHw will mechanically collapse.
- Ethereum Classic (ETC) is already an ETH PoW so it makes no sense to create ETHw.
It can be seen that ETH PoW after the fork will be a Ghost Chain because it does not hold any intrinsic value and will be a parasitic value trap and eat away at retail investors as well as units. for ETH PoW transactions.
What are ETHW and ETHS?
- ETHS (ETH2 or Ethereum PoS) is a token representing the Proof-of-Stake chain of Ethereum after The Merge event.
- ETHW (ETH1, or Ethereum PoW) is a token representing Ethereum’s Proof-of-Work chain that will most likely continue to exist and be mined after The Merge.
What will happen after The Merge?
From a technical point of view, The Merge is inherently a Hard Fork event. There we will see Ethereum from a single chain split into 2 separate chains, ETH PoW and ETH PoS.
At the time The Merge has just started, we will have 2 blockchains with completely similar data. Specifically:
- Token $ETH (including ETH PoW and ETH PoS)
- Stablecoins and all tokens on the Ethereum blockchain
- The entire collection of NFTs on Ethereum
One copy will exist on the PoS chain and the other on the PoW chain. It is conceivable that any asset belonging to the Ethereum dApp system will be doubled in the blink of an eye.
From a technology perspective, assets across the network can be copied. However, the value of these assets is not, because the actual value on the chain will depend entirely on the discretion of the issuer of the on-chain service.
Specifically, if Chainlink chooses to continue providing services on Ethereum PoS and reject Ethereum PoW, then Chainlink’s tokens and dApp services on Ethereum PoW will have no value.
The inevitable role of Stablecoin issuer for Ethereum
Indeed, despite being dubbed the soul of the DeFi world, the core value of Ethereum still comes from the community and chain support service providers including CEX, DEX, Oracle, and stablecoin exchanges.
Vitalik Buterin himself at the BUIDL Asia conference (Seoul), also spoke out about what will determine the future of Ethereum hard forks.
“I THINK THIS IS A PROBLEM IN THE FUTURE. THE DECISION OF WHAT CHAIN ISSUANCE OF STABLECOIN AS USDC ISSUES THE DECISION OF THE USER COMMUNITY.”
Understandably, the role of stablecoin issuers is emphasized. Because, if USDC and USDT don’t own value on Ethereum PoW, the entire DeFi system on the chain will collapse.
Specifically, when USDC and USDT become worthless on the PoW chain, the token pairs supported by the two stablecoins mentioned above in the liquidity pools will become worthless.
Loans collateralized with USDT and USDC will also lose credibility and become bad debt for on-chain dApps.
Therefore, it can be said that the right to decide the survival of the two chains of Ethereum PoW and Ethereum PoS lies entirely in the hands of stablecoin issuers.
Tether and Circle “choose” Ethereum PoS, is the game over?
Most recently, Circle, the company behind stablecoin USDC, has personally asserted its position on the side of Ethereum PoS.
“USDC CAN ONLY BE BELOW ONE VALUED CHAIN AND AS BEEN BELOW, OUR PLAN IS FULL SUPPORT FOR ETHEREUM POS CHAIN AFTER THE MERGE.”
USDC is not only the largest stablecoin (dollar peg) on Ethereum but also the largest ERC-20 asset by valuation overall, with over $38 billion in market capitalization on Ethereum (as of Aug..
Following in the footsteps of Circle, Tether also immediately announced that it would support Ethereum PoS.
According to the above analysis, this move of Tether and Circle seems to have dealt a fatal blow to the units that are trying to fork out Ethereum PoW.
Besides, Ethereum’s leading DeFi protocols including Chainlink, Argent, and DeBank have also strongly said no to ETH PoW support as well as the plan to split the chain.
The above information has drawn a very clear scenario that ETH PoS will become the only mainnet chain that is accepted by the majority of the community as well as the DeFi world.
Meanwhile, ETH PoW is a lifeless shell for miners to continue to extract the last drops of profits from Ethereum.
Verdict
Why are reputable centralized exchanges competing to list ETHW and ETHS?
The Merge is approaching, and CEX exchanges like Bitmex, Gate.io, and MEXC list ETHW just to earn volume from users, thereby bringing in transaction fees – the main profit of CEX exchanges.
Gate.io also clarified that ETHW and ETHS are IOU Tokens that will be delisted after The Merge is completed.
So having a large number of backers does not mean that ETHW will have growth potential.
Should I invest to make a profit from ETHW?
Being listed on exchanges will help ETHW keep a certain price with speculative money pouring in.
However, holding ETHW will be a high-risk game when there is no community or Market Maker behind to subsidize this coin. On the other hand, there are many components ready to dump goods using high-performance MEV trading bots.
In short, if you are a regular retail investor, it is best to protect your position and assets from ETHW.
Find more information about Ethereum:
Website: https://https://ethereum.org/en/
Reddit: https://www.reddit.com/r/ethereum
Twitter: https://twitter.com/ethereum
If you have any questions, comments, suggestions, or ideas about the project, please email ventures@coincu.com.
DISCLAIMER: The Information on this website is provided as general market commentary, and does not constitute investment advice. We encourage you to do your own research before investing.
Lucian
Coincu Ventures
Author
Uncategorized
What are ETHW and ETHS? Notable information about ETH Hard Fork and pre-event The Merge 2022
What are ETHW and ETHS? Notable Information about ETH Hard Fork and Pre-Event The Merge
In today’s article, Coincu will find out with you in detail:
- The Merger Pre-Event ETH Background
- What is the concept of ETHW and ETHS?
- What will happen after The Merge?
- Notable information before The Merge takes place
Explore more: Ethereum The Merge: Origins, Contexts, and Misunderstandings of The Merge 2022
The Merge Pre-Event Scene
The Merge, the most anticipated event in the cryptocurrency industry will successfully take place on September 15, 2022.
This historic event will see Ethereum drop the PoW consensus mechanism and move the entire DeFi array into a new home with PoS consensus.
Over the past few weeks, the Twitter community has had a heated debate about a PoW fork of Ethereum that will coexist with Ethereum PoS after The Merge event.
The reason is simple, The Merge will bring Ethereum from PoW consensus to PoS. This “smashed the rice bowl” for the past 7 years of miners.
Discontent and the pursuit of profit are still there, many components have protested and continued to exploit the Ethereum PoW “gold mine”.
Since then, the whole market is facing the prospect of the parallel existence of 2 Ethereum PoW and PoS chains after The Merge.
Consequences of continuing to Fork an Ethereum PoW
- As a Fork of Fork (ETH is Fork from ETC and ETHw fork from ETH), these chains often lack clear direction, do not store real value, are and unstable, so they are vulnerable to mining attacks.
- As a lifeless clone, ETHw will not receive service support from veteran DeFi platforms like Chainlink Protocol.
- Many Ethereum dApp assets are completely unforkable as it is pegged by assets outside the system, so most dApps forked on ETHw will mechanically collapse.
- Ethereum Classic (ETC) is already an ETH PoW so it makes no sense to create ETHw.
It can be seen that ETH PoW after the fork will be a Ghost Chain because it does not hold any intrinsic value and will be a parasitic value trap and eat away at retail investors as well as units. for ETH PoW transactions.
What are ETHW and ETHS?
- ETHS (ETH2 or Ethereum PoS) is a token representing the Proof-of-Stake chain of Ethereum after The Merge event.
- ETHW (ETH1, or Ethereum PoW) is a token representing Ethereum’s Proof-of-Work chain that will most likely continue to exist and be mined after The Merge.
What will happen after The Merge?
From a technical point of view, The Merge is inherently a Hard Fork event. There we will see Ethereum from a single chain split into 2 separate chains, ETH PoW and ETH PoS.
At the time The Merge has just started, we will have 2 blockchains with completely similar data. Specifically:
- Token $ETH (including ETH PoW and ETH PoS)
- Stablecoins and all tokens on the Ethereum blockchain
- The entire collection of NFTs on Ethereum
One copy will exist on the PoS chain and the other on the PoW chain. It is conceivable that any asset belonging to the Ethereum dApp system will be doubled in the blink of an eye.
From a technology perspective, assets across the network can be copied. However, the value of these assets is not, because the actual value on the chain will depend entirely on the discretion of the issuer of the on-chain service.
Specifically, if Chainlink chooses to continue providing services on Ethereum PoS and reject Ethereum PoW, then Chainlink’s tokens and dApp services on Ethereum PoW will have no value.
The inevitable role of Stablecoin issuer for Ethereum
Indeed, despite being dubbed the soul of the DeFi world, the core value of Ethereum still comes from the community and chain support service providers including CEX, DEX, Oracle, and stablecoin exchanges.
Vitalik Buterin himself at the BUIDL Asia conference (Seoul), also spoke out about what will determine the future of Ethereum hard forks.
“I THINK THIS IS A PROBLEM IN THE FUTURE. THE DECISION OF WHAT CHAIN ISSUANCE OF STABLECOIN AS USDC ISSUES THE DECISION OF THE USER COMMUNITY.”
Understandably, the role of stablecoin issuers is emphasized. Because, if USDC and USDT don’t own value on Ethereum PoW, the entire DeFi system on the chain will collapse.
Specifically, when USDC and USDT become worthless on the PoW chain, the token pairs supported by the two stablecoins mentioned above in the liquidity pools will become worthless.
Loans collateralized with USDT and USDC will also lose credibility and become bad debt for on-chain dApps.
Therefore, it can be said that the right to decide the survival of the two chains of Ethereum PoW and Ethereum PoS lies entirely in the hands of stablecoin issuers.
Tether and Circle “choose” Ethereum PoS, is the game over?
Most recently, Circle, the company behind stablecoin USDC, has personally asserted its position on the side of Ethereum PoS.
“USDC CAN ONLY BE BELOW ONE VALUED CHAIN AND AS BEEN BELOW, OUR PLAN IS FULL SUPPORT FOR ETHEREUM POS CHAIN AFTER THE MERGE.”
USDC is not only the largest stablecoin (dollar peg) on Ethereum but also the largest ERC-20 asset by valuation overall, with over $38 billion in market capitalization on Ethereum (as of Aug..
Following in the footsteps of Circle, Tether also immediately announced that it would support Ethereum PoS.
According to the above analysis, this move of Tether and Circle seems to have dealt a fatal blow to the units that are trying to fork out Ethereum PoW.
Besides, Ethereum’s leading DeFi protocols including Chainlink, Argent, and DeBank have also strongly said no to ETH PoW support as well as the plan to split the chain.
The above information has drawn a very clear scenario that ETH PoS will become the only mainnet chain that is accepted by the majority of the community as well as the DeFi world.
Meanwhile, ETH PoW is a lifeless shell for miners to continue to extract the last drops of profits from Ethereum.
Verdict
Why are reputable centralized exchanges competing to list ETHW and ETHS?
The Merge is approaching, and CEX exchanges like Bitmex, Gate.io, and MEXC list ETHW just to earn volume from users, thereby bringing in transaction fees – the main profit of CEX exchanges.
Gate.io also clarified that ETHW and ETHS are IOU Tokens that will be delisted after The Merge is completed.
So having a large number of backers does not mean that ETHW will have growth potential.
Should I invest to make a profit from ETHW?
Being listed on exchanges will help ETHW keep a certain price with speculative money pouring in.
However, holding ETHW will be a high-risk game when there is no community or Market Maker behind to subsidize this coin. On the other hand, there are many components ready to dump goods using high-performance MEV trading bots.
In short, if you are a regular retail investor, it is best to protect your position and assets from ETHW.
Find more information about Ethereum:
Website: https://https://ethereum.org/en/
Reddit: https://www.reddit.com/r/ethereum
Twitter: https://twitter.com/ethereum
If you have any questions, comments, suggestions, or ideas about the project, please email ventures@coincu.com.
DISCLAIMER: The Information on this website is provided as general market commentary, and does not constitute investment advice. We encourage you to do your own research before investing.
Lucian
Coincu Ventures
