Play Fusion: How To Get Free Money From Ethereum PoS Upgrade

key takeaways

  • A coalition of developers and miners plan to fork the Ethereum blockchain after the merger.
  • Doing so will create a new proof-of-work chain that will match users’ ETH balances with an equal amount of a new currency called ETHW.
  • ETHW is likely to have some value and can be sold on centralized exchanges that support your trade.

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After Ethereum is forked, addresses holding ETH will receive an equal amount of ETHW on the forked blockchain.

Preparing for the merger

Ethereum is switching to Proof of Stake, but miners are planning a Proof of Work fork.

A group of anonymous developers backed by many large Ethereum miners is expected to fork the Ethereum blockchain after next week’s merger, keeping a version of the network running on the Proof-of-Work consensus mechanism. (PoW) current while the main blockchain transitions to Proof of Stake (PoS).

The fork, commonly known as ETHPoW, will share the same transaction history as the Ethereum mainnet, but will start creating its own blocks after the Merge update goes live. Because the PoW fork starts from the pre-merge state of the Ethereum network, all token and smart contract balances will be transferred as well. This means that everyone holding ETH on-chain will end up having an equal balance of ETHW on the forked ETHPoW chain. ETHW will be native only to the PoW fork and will represent a completely different asset than the original ETH on Ethereum.

For many Ethereum believers, the planned PoW fork is of little interest as an investment. Virtually all network infrastructure protocols, NFTs, and DeFi have publicly announced that they will support the PoS chain, leaving the PoW fork in a tough spot. Upon launch, decentralized exchanges on the fork will likely cease to function, and centralized stablecoins like USDC and USDT will be worthless, which could cause massive liquidations and break many DeFi protocols.

Even though the PoW fork has to start from scratch, there is one token that will likely hold some value: ETHW. Like the 2016 DAO fork that created Ethereum Classic, the PoW fork might also have some loyal fans who continue to develop it, creating demand for its token. Conversely, those who don’t think the fork will go anywhere may want to sell their ETHW tokens after the merger for some extra profit. But what is the best way to ensure you receive your ETHW? Which exchanges plan to support the Ethereum PoW hard fork? Read on to make sure you get the most out of the Merge Fork and PoW.

Centralized exchanges

The easiest way to play Merge is by depositing ETH on a centralized exchange that has announced that it will support PoW forking. The list below is not exhaustive, but covers the major exchanges that have issued statements:

  • Poloniex has already listed an ETHW placeholder token and will list and support trading of the ETHW fork when it launches, including crediting user accounts with ETHW in a 1:1 ratio to the amount of ETH they hold. .
  • Binance, MEXC Global and will support an ETH PoW hard fork and also plan to credit user accounts with ETHW in a 1:1 ratio with ETH.
  • OKX will list and support trading of an ETHW fork.
  • BitMEX has launched ETHPOWZ22, a linear ETHPoW futures contract on USDT margin.
  • Coinbase, FTX, and Kraken have all said that they will review an ETH PoW hard fork like any other asset and list it for trading if appropriate.

Currently, it appears that Poloniex, Binance, MEXC Global, and are the safest to give users their ETHW equivalent after the Merger. Of these, Binance likely has the largest market as it is currently the top centralized exchange by trading volume.

However, those who are unable or unwilling to deposit their ETH on one of these exchanges prior to the Merger have another option. Holding ETH in a non-custodial Ethereum wallet ensures that your address will receive ETHW on the new PoW fork.

taking custody

A non-custodial wallet should be the fastest way to access your ETHW after the merger. While centralized exchange users may have to wait hours or even days for their ETHW to reach their accounts, taking control of your ETH funds is the safest way to ensure that you have access to your PoW fork coins.

However, the trade-off is that accessing the new PoW chain requires some technical knowledge and could expose users to risk. Those who take this approach will need to add the PoW network to their EVM wallet once it launches. In MetaMask, you can do this by clicking on the network at the top of the browser extension and selecting “Add Network”. You will then need to enter the name of the ETH PoW chain, the RPC URL and the chain ID (these details will be announced after the launch of the PoW chain). The process is relatively simple, similar to adding RPCs for other Ethereum-compatible chains like Polygon or Avalanche.

Another consideration for those planning to self-custody their ETH prior to the Merger is consolidation. If your ETH is locked in a smart contract, is on a Layer 2 chain, or is found via a protocol like Lido, it will not be compared to ETHW on the PoW chain. To maximize the amount of ETHW you receive, it’s a good idea to convert your assets to regular ETH and store them in your wallet before the Merger.

Although using a non-custodial wallet guarantees that you will receive coins from the PoW fork, the limiting factor will be finding a market to sell them after the merge. Since all the tokens on the forked chain except ETHW will surely be worthless, the use of decentralized exchanges is out of the question. Those who want to withdraw money will still have to wait for a centralized exchange to open ETHW deposits.

To make sure you’re prepared, consider setting up accounts on the various exchanges that will support ETHW in advance. That way, those who want to can transfer their ETHW as soon as possible, potentially selling it at a higher price.

Finally, it is essential to understand the risks associated with Merge and any new PoW forks. A frequently mentioned danger is that if an Ethereum fork is launched with the same chain ID as the main PoS chain, transactions could be “retransmitted”. This is where transactions signed on a forked chain could be validated on the main Ethereum PoS chain, allowing for new scams that potentially deplete users’ wallets.

While such scams are possible, it is doubtful that the PoW fork will start with the same chain ID. However, unscrupulous individuals may attempt to launch other forks designed to steal PoS ETH from users. Be very careful before signing transactions on any ETH forks; if in doubt, do nothing. It is better to lose a few hundred dollars than to lose your entire stack of ETH.

The latest estimates project that the merger will take place between September 13 and 14. If you plan to send ETH to a centralized exchange or to your own wallet, make sure you do it well in advance. Most exchanges plan to stop ETH trading a few hours before the Merger to ensure no user funds are lost, so don’t leave things to the last minute.

Whether you’re sticking to trades or planning to hold your ETH, double check everything before sending trades and stay safe.

Disclosure: At the time of writing, the author owned ETH and several other cryptocurrencies.

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