Want to profit from Ethereum PoW hard fork? Here is a guide to avoid pitfalls

When the countdown reaches zero, most of the Ethereum ecosystem will switch to the new proof-of-stake chain, while a small number of disgruntled Ethereum miners who are "trapped" in millions of dollars of mining equipment are unwilling to let their business go to zero, so they announced plans to fork the chain and maintain the Ethereum Proof-of-Work mechanism (ETHPOW).

It’s unclear what the future holds for the forked chain, called EthPoW, but it promises to grant new ETHPOW tokens to ETH holders at a 1:1 ratio. If you’re thinking of selling them for a quick profit, be extremely careful, as there are many technical challenges involved.

How to participate and play Ethereum PoW fork (if any)? This article provides you with a checklist and a guide to avoid pitfalls.

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

Skills: Intermediate

Time required: 1 hour

Return on Investment (ROI): Potentially Increase Your ETH Holdings

ETHPOW Security Checklist

Learn the basics of merging

Instead of using Proof of Work (PoW), it uses Proof of Stake (PoS). What does this mean?

• Ethereum is migrating from PoW to PoS consensus

• PoW uses energy (in the form of computing power) to ensure security, while PoS uses capital (in the form of crypto tokens) to ensure 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 about 99% after switching to PoS
  

• This merger with PoS has received overwhelming community support, meaning that almost the vast 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

Since July 2022, miners represented by Chandler Guo have accelerated plans to fork out 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 doesn’t have a serious value proposition — it could be another “leek-cutting” exercise, where participating miners pretend to maintain some kind of dominant permissionless blockchain in a post-merger world.

When EthPoW launches, ETHPOW tokens will be "airdropped" to ETH holders at a 1:1 ratio. Attempting to sell these tokens may expose you to Replay Attacks, where an attacker "replays" your EthPoW transactions on the real Ethereum chain and steals your funds. More information on this attack vector is below.

Check ChainID

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 a comment to the codebase. The EthPoW ChainID is roughly as follows:

• ChainID was originally introduced in EIP-1555 to mitigate replay attacks between 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.
  

• If EthPoW continues this dangerous behavior, it will create an ideal breeding ground for hackers to conduct replay attacks. Note: If the network is launched with a ChainID of 1, do not interact with the ETHPOW fork under any circumstances, you may lose all your ETH.

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

• Additionally, some DeFi projects like Maker’s DAI stablecoin are hardcoded to use a ChainID of 1, meaning that interacting with their version of EthPoW anyway leaves you open to replay attacks.

Determining if ETHPOW is worth it?

• Assuming EthPoW launches with a ChainID of 10001, mitigating most replay attack issues — even if it doesn’t get in the way, 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.
  

• Furthermore, 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 prior to launch.
  

• For many ETH holders, claiming a token worth $16-30 per token is not economically viable, although price discovery has the potential to push ETHPOW above this range when it reaches exchanges. On the other hand, the price of ETHPOW could fall quickly as many people sell tokens in large quantities.
  

Get your ETH ready

• 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.

• In order to possibly prepare for the sale of ETHPOW, you will be most secure by keeping ETH in a non-custodial wallet that you fully control before the EthPoW fork. If you hold ETH in an exchange wallet, the platform may keep the user's ETHPOW airdrop for itself.

• 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.
  

• Unwrap your Wrapped ETH ( WETH ) to the ETH pre-fork so you don't have to bother trying to unwrap WETH once on the EthPoW side (if it goes live).
  

• Also withdraw your ETH from the DeFi liquidity pool, because any ETH you have in the liquidity pool will not be credited to ETHPOW at the time of the fork.
  

• Consider borrowing ETH using DeFi lending protocols to maximize your pre-fork ETH holdings; however, note that some lending protocols like Aave have suspended ETH lending amid a surge in lending activity.
  

Choose your exchange

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

That said, it may take days, weeks, or months to support ETHPOW deposits and/or account credits - make sure the exchange you land on has a clear and detailed support plan so you know what can be done and when.

Still worried? Then don't do anything

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

The key thing to remember here is that non-engagement is a viable strategy.

If you can’t confidently go through the steps in the checklist above, “playing the EthPoW fork” might just mean abstaining and watching 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.

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 EthPoW launch will go smoothly.