The Ethereum merger is imminent, and fork stakeholders are gathering. What should ordinary users do?

As the Ethereum “merge” date approaches (expected to be September 15, the exact date depends on the hashrate ), discussions about a hard fork are intensifying.

At present, many teams in the community have publicly announced that they will hard fork Ethereum to retain the PoW mining mechanism, and several fork projects including EthereumPoW and Ethereum Fair have been born; miners, mining pools, trading platforms, DeFi project parties, stablecoins ( USDT , USDC ), capital and other forces have also expressed their views on the hard fork, each holding their own opinions.

All signs indicate that the largest hard fork in Ethereum’s history is inevitable.

Why is Ethereum forked? What are the interests of the various forces behind the fork? At this critical juncture, how should project developers and users make decisions? This article from Odaily Planet Daily will answer these questions one by one.

(1) Interest considerations behind the fork

On August 1, "Bao Erye" (Guo Hongcai), a veteran player in the cryptocurrency circle, established an Ethereum fork discussion group on WeChat and subsequently released the "Ethereum Fork Declaration," which marked the beginning of this dispute.

In the declaration, he said that Ethereum miners have invested a lot of capital, money, and time in the Ethereum ecosystem. In order to prevent miners from losing their jobs, he decided to fork Ethereum and advocated that the POW ETH chain after the fork should not be issued, pre-mined, or modified, and the original chain should be maintained.

Due to his "criminal record" of supporting a large number of projects that have gone back to zero in the past, Bao Erye's new project has been ridiculed by the public, and many people have questioned whether he is once again "making money" by forking (Note: Bao Erye also did the Bitcoin God fork, which has now gone back to zero).

However, the discussion about Ethereum's hard fork retaining the POW mining mechanism has aroused strong concern in the entire community.

Over the past two weeks, various forces have expressed their views on this topic:

Judging from the current views of all parties, most of those who support the fork are Ethereum miners, mining pools (f2pool), and even the activities of mining machine manufacturers; while exchanges are basically neutral. Platforms such as OKX, Binance , and Bitwell have stated that if new forked coins are generated, they will be listed online after evaluation if they meet the conditions; capital ( DCG ), head DeFi projects (AAVE, Chainlink ), wallet applications (Argent, DeBank) and stablecoins (USDC, USDT) have clearly stated that they only support the Ethereum POS chain, and do not support forked projects such as Ethereum PoW.

Many people, under the banner of liberalism and decentralized community autonomy, advocate for splitting into two Ethereum networks (PoW and PoS ) to compete together and let the market vote with its feet. There are also a group of people who think that the PoW mechanism is fairer and safer .

But in my opinion, the core purpose of the fork has nothing to do with faith, everything is based on the interests of all parties. If you really have a special liking for Ethereum and POW, ETC seems to be a better choice, and there is no need to fork Ethereum.

Miners are profit-driven and hope to continue to maintain high mining income. Once Ethereum ends POW mining, miners can only turn to other POW networks. The more computing power is involved, the greater the competition, and the lower the income will be; or turn to Web3 protocols such as Render Network, Livepeer and Akash to provide high-performance computing, rendering and other services. However, in reality, the current computing power of the entire Ethereum network is 935 TH/s, and it is difficult for these other protocols to take over all the computing power and consume excess computing power capacity.

Mining machine manufacturers do not want the Ethereum POW mining mechanism to disappear. Since last year, many mining machine manufacturers, including Bitmain (Antminer E9), Innosilicon (A10, A11), and OmniVision (Pineapple V1), have successively launched Ethereum ASIC mining machines with higher mining efficiency. The cancellation of the Ethereum POW mining mechanism will result in the new machines no longer being sold. In this context, mining machine manufacturers are likely to return to their old business and lead the Ethereum fork again, just like they led the Bitcoin fork to BCH in 2017.

For mining pools, the current POW business revenue far exceeds the POS revenue, prompting them to stand on the side of supporters.

For trading platforms, users who obtain forked new coins have trading needs, which can bring them new traffic and handling fees. There is no reason to "reject" the fork event. However, considering that the new coins on the platform may endorse the new coins, they need to be treated with caution. Of course, some trading platforms have begun to launch forked coin futures. Vitalik Buterin criticized these people for just wanting to make quick money.

(2) Should we get on board the new fork project?

To be clear, forking Ethereum is not an easy task.

This fork is completely different from the ETC/ETH fork in 2016. From a code perspective, this fork requires the removal of all POS conversion logic from the Ethereum testnet code, the removal of the difficulty bomb, and the update of the chain ID for protection; the mining software may also need to be forked/updated, which will require cooperation with wallet providers to agree to support ETH POW; cooperation with exchanges is required to agree to support ETH POW.

ETC Cooperative believes that with only a few weeks until the merger, it is too late to do anything now. “This is a huge and arduous coordination task, and the merger is only a few weeks away. Today’s prosperity is unlikely to be repeated on the new Pow chain.”

Therefore, the security of forked projects is questionable. If forked hastily under tight time constraints, the underlying code changes may have vulnerabilities, and due to the lack of detailed audits, the possibility of being attacked by hackers increases, which may eventually lead to a sharp drop in asset prices.

Even if the security is passed, the ecological value of the new fork project is not high. Vitalik Buterin recently said that Ethereum PoW fork is unlikely to be widely adopted in the long term. The core reason is that the fork project only captures miners and computing power, but does not attract enough developers to join.

The characteristics of the Ethereum ecosystem have always been: projects follow the core developers of Ethereum, and users follow the projects. Without developers, it is difficult to generate applications; without applications, there are no users, the value of forked projects gradually decreases, and miners' income decreases again, eventually entering a death spiral.

Currently, only a few projects have announced their support for forked projects: the forked project Ethereum Fair announced a partnership with the cross-chain project SWFT Blockchain; APENFT Marketplace announced support for Ethereum's potential forks and the circulation of new chain NFTs. However, these projects themselves are not top-tier and it is difficult for them to attract enough users to support the development of the ecosystem.

The leading projects that have already expressed their stance, such as AAVE, Chainlink, Argent, DeBank, etc., all follow the asset side (USDC, USDT) and become supporters of the Ethereum POS chain, and are bound to lead users into the new ETH2.0 ecosystem.

“Tether will closely monitor the progress and preparations for the merger and will support PoS Ethereum in accordance with the official timeline. We believe that a smooth transition is critical to the long-term health of the DeFi ecosystem and its platforms, including those using USDT. This has nothing to do with our preference for PoW or PoS, and stablecoins should act responsibly and avoid disruption to users.”

In addition, if we compare it with the Bitcoin fork in 2017, the death trend of forked projects will be more obvious. In that year, there were nearly 100 forked projects on the market, including Bitcoin Cash (BCH), Super Bitcoin, Bitcoin Pizza, Bitcoin Boy, Bitcoin Hot, etc. Except for BCH, which continued to be popular for two years (with the support of Bitmain), the popularity of other forked projects could only be maintained for a period of time. The price continued to fall after the launch, and without computing power support, they eventually died out in the long history of encryption.

Finally, the forked project may eventually become a profit-making tool for a few large investors. Take the forked project EthereumPoW launched by "Bao Erye" as an example. The plan is to map the tokens of the Ethereum Foundation to the DAO organization, and the tokens on the original chain will be locked and released after half a year. This means that the users of the new chain are racing with the DAO organization to see who can sell out their coins first.

(Ethereum PoW solution circulated on the Internet)

Therefore, Odaily Planet Daily recommends being cautious when getting on an Ethereum fork project. After all, it is difficult to predict whether you are getting on a chariot or a hearse.

(3) What should Ethereum mainnet users do?

Forks are inevitable. How do users of the Ethereum mainnet cope with it now?

First of all, the price change that has attracted much attention. Compared with the Bitcoin fork in 2017, it is highly likely that the price of Ethereum will continue to rise before the fork. In the two weeks before and after the Bitcoin fork in August 2017, the price rose from $2,200 to $4,200, an increase of 90%. The time of this fork is mid-September. At that time, under the dual stimulation of the fork and the "merger", the price of Ethereum may have a good increase.

Of course, the price of Ethereum may experience drastic fluctuations during this period, especially as Ethereum's open interest has continued to soar recently and is close to its historical high. The possibility of a sharp correction cannot be ruled out, so use futures leverage products with caution.

In addition, before the merger and fork, in order to prevent transaction rollbacks and reentry attacks caused by forks, the trading platform may close the deposit and withdrawal channels of Ethereum and ERC20 tokens in advance. Users with such needs are advised to operate in advance as much as possible.

In terms of DeFi, projects that explicitly state that they do not support POW chains may shut down smart contracts to avoid confusion and loss for users. Therefore, it is recommended that users withdraw their positions in various protocols in advance and exchange them for Ethereum (the potential benefit is that they can obtain forked coins). If you are holding or trading NFTs, you need to focus on observing whether the forked chain of Ethereum follows the EIP-155 protocol to prevent reentrancy attacks from causing the loss of your NFTs (recommended reading "If Ethereum forks, will NFTs also "fork"? " ).

From ETC in 2016 to the POW consensus fork in 2022, every hard fork is a big test for Ethereum. But Ethereum has proven time and again that this huge and vibrant ecosystem is not afraid of any challenge, and has gradually become the holy grail of the industry, just like Bitcoin.