Analysts called a possible Ethereum PoW fork unviable

CoinShares Experts skeptical prospects for a potential fork of Ethereum after the transition of the main network to the Proof-of-Stake consensus algorithm.

“Some of the miners announced their support for the Ethereum fork, which will not switch to Proof-of-Stake, but will remain on Proof-of-Work. From a technical point of view, this fork will not affect the current version of Ethereum, that is, the updated ETH2 network,” the company’s analysts noted.

They allowed for some price volatility in the future, eliminating “direct on-chain risks”.

CoinShares listed the main factors why the updated Ethereum will emerge victorious from the current situation:

• the current network has more social support from the Ethereum Foundation and the wider community. This, in particular, is evidenced by the decline in prices for video cards;
• stablecoin issuers will have to choose a chain. They will almost certainly stay with ETH2, “for reputational and regulatory reasons”;
• wrapped tokens like WBTC and RenBTC will lose value on the alternative chain “because they cannot be redeemed through the underlying asset”;
• new PoW version of Ethereum will need a hard fork to be removed from the code “difficulty bomb”. Otherwise, the blockchain will “become unusable”;
• in the context of ETHPoW, staking tokens and rewards will “become irrevocable”. They cannot be distributed properly.

“This doesn’t mean that exchanges will delist ETHPoW if/when this fork comes along,” said CoinShares researcher Mark Arjun.

In his opinion, many will sell the coins accrued as a result of the hard fork for the updated Ethereum.

“Not sure if the potential value of ETHPoW is close to the price of ETH2,” Arjun emphasized.

At the time of writing, the price of derivatives tokens based on a potential fork is $101, according to CoinMarketCap. Ethereum market value more than 17 times surpasses ETHPoW indicator.

Earlier, the BitMEX exchange introduced derivatives based on ETHPoW tokens of a potential fork of the second largest cryptocurrency by capitalization.

Poloniex also announced support for the proposed Ethereum PoW fork and listed ETHPoS (ETHS) and ETHPoW (ETHW) tokens on August 8. The MEXC Global platform did the same.

Huobi said it would take steps to support a potential fork after “obtaining an overall picture of user sentiment” and if the assets comply with the listing rules.

Trading platforms Digifinex and OKX have also begun to assess the consequences of a possible fork of the second largest cryptocurrency by capitalization.

Representatives of the DeFi platform DeBank declaredthat will not support the Ethereum fork on the PoW algorithm.

Recall that the developers of the Chainlink decentralized oracle network made a similar decision.