Not everyone is on board with Ethereum’s move from PoW to PoS, so much so that some miners apparently really want to create a new cryptocurrency derived from Ethereum but still based on PoW.
They will do this with a hard fork, probably after the Merge, because of which a new cryptocurrency will be created. Anyone holding ETH at the time of this de facto fork will receive an equal amount of the new ETHPoW tokens.
CoinGecko’s COO explains how to get the new ETHPoW after the Merge
CoinGecko co-founder and COO Bobby Ong wanted to explain how to go about getting these new tokens.
The Ethereum Merge is scheduled to take place on 13 September. Christmas season is here again.
ETH holders will soon be airdropped ETH PoW tokens. What should you do to best position yourself?
Here are 7 steps you may consider to fully take advantage of the Merge:
— Bobby Ong (@bobbyong) September 5, 2022
The reality is that ETH themselves will also be replaced with the new ETH2, but this transition will not deliver new tokens to the holders: it will merely replace the old ones on the old PoW-based blockchain with the new ones on the new PoS-based blockchain. Therefore, it will only be a sort of upgrade of ETH, with the old ones being burned once they are replaced. Moreover, it will happen automatically simply by updating the wallet software.
In contrast, the issue regarding the PoW fork is an entirely different matter.
Anyone holding ETH at the time of the PoW fork, should it happen, will find themselves with the same number of ETHPoW on the new blockchain created by the fork, based on PoW, and which will have absolutely nothing to do with Ethereum’s new PoS-based blockchain.
But what will need to be done, once the PoW fork occurs, to retrieve these new tokens?
The seven steps listed by Bobby Ong
Ong lists seven steps.
First step
The first is to hold ETH on a wallet at the time of the PoW fork. Ong recommends holding them on a non-custodial wallet, and therefore not on an exchange’s wallet where you may not be able to receive the new tokens.
Some exchanges have already publicly let it be known that they will give them to their users should the PoW fork be successful, while other exchanges have not yet said anything about it. However, those who hold ETH on a non-custodial wallet will always be able to retrieve the new ETHPoW tokens.
Ong points out that holding ETH on a wallet of an exchange that supports PoW fork, at the time of the fork, simplifies things a lot, because the users in this case will just have to wait. Moreover, they can sell them as soon as they receive them, without having to wait until they can be withdrawn or deposited.
Second step
The second step is only necessary for those who hold ETH on layer 2 such as Optimism, Arbitrum, Polygon, Avalanche or others. In fact, those who keep ETH on layer 2 will not be given any new ETHPoW tokens. So, in this case, it would be better to move them to a regular layer 1 wallet, i.e., bring them back to the Ethereum blockchain.
Third step
The third step, on the other hand, is for all those who own wrapped, WETH-type ETH. Again, they will not receive any new ETHPoW tokens, so he recommends “unwrapping” them.
Fourth step
The fourth concerns those who have liquidity on the DeFi protocols.
In fact, in this case too, those who have ETH in liquidity pools of DeFi protocols will not receive the eventual new ETHPoW tokens. In addition, before the eventual PoW fork there could be a liquidity crisis on these protocols, precisely because many may withdraw their ETH.
This means that on the day of the PoW fork, or in the days just prior to it, the DeFi protocols could suffer.
Fifth step
The fifth is a piece of advice.
Ong suggests borrowing ETH just before the PoW fork, and returning it soon after. In this way, more ETHPoW can be obtained, although in truth it is a risk. In fact, there is no guarantee that this fork will succeed, and the value of the ETHPoW thus obtained may be very little. The Merge, on the other hand, which is an entirely different thing, should have no problem succeeding, regardless of what happens to the PoW fork.
It is also worth noting that ETH holders will receive an identical number of ETHPoW, but also that the market value of ETHPoW is certainly not that of ETH.
For example, a person who owns 0.2 ETH will receive 0.2 ETHPoW. While 0.2 ETH is worth about $300, 0.2 ETHPoW might be worth only $10, or one-thirtieth.
In fact, for those who do not know, there are some kind of “futures” in the market about the value that ETHPoW will have once it lands on the market (ETHW), and right now that value is estimated to be about $46, compared to about $1,500 for ETH.
Sixth step
The sixth step suggested by Ong is to monitor the value ratio between sETH and ETH, because as he had mentioned earlier many may want to sell sETH to cash in ETH before the PoW fork.
Seventh step
The seventh is a tip: “buy the rumor, sell the fact.” That is, consider selling ETH after the fork.
The post Bobby Ong: Here’s what to do to receive ETHPoW after the Merge appeared first on The Cryptonomist.
