What should we pay attention to and what should we do before and after the EthPoW fork?

When this countdown reaches zero, most of the Ethereum ecosystem will have moved to the new Proof-of-Stake chain, with the exception of a few disgruntled Ethereum miners who will be sitting on million-dollar mining rigs.

Rather than ceasing their operations, these miners announced their plans to merge-fork and maintain the proof-of-work version of Ethereum (ETHPOW).

If this happened, you could have a copy of every digital token in existence on a ghost town version of the old Ethereum chain.

Some of these tokens may have value, but most will not. If you are thinking of selling them for a quick profit, do so very carefully!

There are many technical challenges you need to be aware of. This article provides a handy checklist of what to look out for. Here’s how to win the Ethereum PoW fork (if there is one).

How to win the EthPoW fork

Image credit: Logan Craig

During the merger, a group of miners planned to fork and maintain a proof-of-work (PoW) alternative while the rest of the Ethereum community migrated to proof-of-stake (PoS).

This fork, called EthPoW, is not yet ready to have a serious future, but it should grant new ETHPOW tokens to ETH holders at a 1:1 ratio.

Interacting with ETHPOW can be extremely risky, so this Bankless strategy will provide a checklist you can go through to safely navigate forks.

• Goal : Sell as much of your EthPOW as possible in exchange for ETH

• Skills : Intermediate

• Effort : 1 hour

• ROI : Potentially Increase Your ETH

Learn the basics of merging

PoolTogether co-founder Leighton Cusack said that the "merge" refers to the Ethereum blockchain changing its consensus mechanism. Instead of using "Proof of Work" (PoW), it will use "Proof of Stake" (PoS). What does this mean?

The combined tl;dr is as follows:

• Ethereum is migrating from PoW to PoS consensus.

• PoW uses energy ( in the form of computation) for security. PoS uses capital ( in the form of crypto tokens) for security. The former is obviously very energy-intensive, while the latter is very energy-efficient.

• The result is that Ethereum’s energy usage will drop by approximately 99% after switching to PoS.

• This move to merge to PoS has received overwhelming community support, meaning that a near-majority of Ethereum community members and projects are migrating to the newer Ethereum chain and will not support any PoW forks.

Understanding the basics of the EthPoW fork

Hudson Jameson, community manager at the Ethereum Foundation, said : “I highly doubt how much computing power they will get if they launch after the merger. By then, the computing power will be on other chains, and the value support of ETHPoW is already very fragile.”

The summary of EthPoW is as follows:

• Since July 2022, miners such as Chandler Guo have accelerated plans to fork a PoW version of Ethereum during or shortly after the merger.

• Since essentially all Ethereum activity is moving to the PoS chain, this EthPoW fork does not have a significant value proposition - it is a money grab masquerading as a permissionless blockchain to allow participating miners to maintain some form of dominance in a post-merger world.

• When it launches, EthPoW will "airdrop" ETHPOW tokens to ETH holders on a 1:1 basis. Attempting to sell these tokens may expose you to a replay attack , in which an attacker "replays" your EthPoW transactions on the real Ethereum chain and steals your funds accordingly. More on this attack vector below ⬇️.

Check ChainID

Paradigm research assistant Frankie said that the ETHPoW team quickly ran out of time to release client binaries before the merge, and the closest thing they did to changing the chainID was to add comments to the code base.

The summary of EthPoW ChainID situation is as follows:

• ChainID was originally introduced in EIP-155 to mitigate replay attacks between the Ethereum and Ethereum Classic chains; the former’s ChainID remained at 1, while Ethereum Classic moved to 61.

• At the time of writing, EthPoW developers have still not updated the fork’s ChainID from 1 in their codebase — meaning EthPoW is about to launch with the same ChainID as Ethereum.

So, what is a replay attack? A replay attack is taking a transaction from one network and using it on another network. If you sent 100 WETH to someone on the merged Ethereum PoW fork, a replay attack can repeat this operation on Ethereum PoS without your permission.

• If EthPoW continues with this dangerous dynamic, it will create ideal conditions for hackers to conduct replay attacks.

? If the chain with network ChainID 1 is launched, do not interact with the ETHPOW fork under any circumstances. You may lose all your ETH. ?

• In other words, the first major item on this checklist is to check whether the initial ChainID of EthPoW is 1 or the planned alternative 10001. If the creators chose the former and not the latter, do not attempt to interact with the fork at any time.

• Additionally, some DeFi projects, such as Maker’s Dai stablecoin, are hardcoded to use a ChainID of 1 , which means that interacting with their EthPoW versions will expose you to replay attacks regardless. Check the recent communications of each project to see how they are doing in this regard.

Some examples of interactions that could potentially be replayed: On a forked Ethereum PoW chain, interact with any Maker contract directly from the same address you used on Ethereum before the fork.

Deciding if ETHPOW is worth the trouble

• Assuming EthPoW launches with a ChainID of 10001, mitigating most replay attack issues — even if this is the case, is the value of ETHPOW worth the time and effort to claim the tokens?

• This is the biggest question right now! At the time of writing, the ETHPOW IOU is valued at $29.30 per token.

• Additionally, the difference between the current spot price of ETH ($1,726) and the current price of ETH September 30 futures ($1,710) suggests that the implied price of ETHPOW is around $16 before launch.

• For many ETH holders, it is not financially worthwhile to claim tokens worth $16 to $30 each, although price discovery has the potential to push ETHPOW above this range by the time it reaches exchanges. On the other hand, the price of ETHPOW could fall quickly as many people sell their tokens in large quantities.

✅ Prepare your ETH stack

Bobby Ong, co-founder and COO of CoinGecko, said that the Ethereum merger is scheduled for September 13. Christmas season is here again. ETH holders will soon receive airdropped ETH PoW tokens. What should you do to put yourself in the best position? Here are 7 steps you can consider to take full advantage of the merger:

• If EthPoW actually starts with a ChainID of 10001, and the ETHPOW token starts with some nice price action, it might be worth selling your ETHPOW for real ETH, USD, etc.

• To prepare for selling ETHPOW, you can get the best guarantee by placing your ETH in a non-custodial wallet that you fully control before the ETHPOW fork. If you have ETH in an exchange wallet, the exchange may retain your ETH airdrop.

• Also, make sure you hold your ETH on Ethereum before the fork, and not on L2, such as Arbitrum. Only ETH on Ethereum can earn ETHPOW tokens on EthPow.

• Also, unwrap your Wrapped ETH (WETH) to ETH before the fork so you don’t have to try to unwrap your WETH on the EthPoW side once/if it goes live.

• At the same time, you must withdraw your ETH from the DeFi liquidity pool, because in the event of a fork, any ETH you have in the liquidity pool will not be credited to ETHPOW.

• Consider borrowing ETH using DeFi lending protocols to maximize your ETH holdings before the fork; however, note that lending protocols such as Aave have suspended ETH lending amid a surge in lending activity.

Massive overnight rate movement on the Aave ETH market as the pause on borrowing has been voted in (queued for execution later today). Last minute borrowers coincided with redemptions, pushing utilization to >75%.

Choose your exchange

• Some exchanges, such as BitMEX, have announced plans to support ETHPOW trading.

• That said, it may take days, weeks, or months for some exchanges to support ETHPOW deposits and/or account credits - make sure the exchange you land on has clearly detailed its support plans so you know what you can do and when.

Worried? Do nothing

Now, there are a lot of “ifs” when considering whether or not you should try to sell ETHPOW.

The key thing to remember is that not playing is a viable strategy here.

If you can’t confidently complete the checklist above, “winning the EthPoW fork” might simply mean abstaining from voting and observing what happens from the sidelines.

The big question is whether this obscure fork will launch with a ChainID of 1 or 10001. If it is 1, then do not interact with the fork, as the risk of a replay attack on your real ETH far outweighs the proceeds you would gain from selling it.

What is the best case scenario?

EthPoW starts at 10001 ChainID, and you can deposit ETHPOW into a supported exchange and then cash out for a comparable amount of USD, or buy more ETH, or whatever suits you. However, at this point, it seems unlikely that the launch of EthPoW will go smoothly.