The highly anticipated update to the Ethereum blockchain, The Merge, took place on September 15, 2022. Crypto enthusiasts eagerly looked forward to the shift from proof of work (PoW) to proof of stake (PoS) consensus.
Before The Merge, some ETH miners, whose means of livelihood are now at risk, were hell-bent on forking the Ethereum blockchain to EthereumPoW, which would continue operating on PoW.
Ethereum is no stranger to hard forks. Post Merge, Ethereum has at least three distinct versions — Ethereum, Ethereum Classic and now EthereumPoW. This article is a guide to all you need to know about the new EthereumPoW hard fork, and whether it’s worth investing in.
What Is ETHW?
ETHW (or EthereumPoW) is a hard fork of the original Ethereum blockchain network, which went live after The Merge. EthereumPoW will continue with the contentious PoW consensus mechanism, while Ethereum will move over to the energy-efficient PoS consensus.
ETHW is the brainchild of a group of Ethereum miners — suppliers of the massive computing resources for processing and validating transactions on PoW networks. Concerned that the transition to PoS would leave them stranded, they decided to sustain the old PoW network.
ETHW Core
The group behind ETHW, known as the ETHW Core, announced on September 13, 2022 that their ETHW mainnet would launch within 24 hours of The Merge. While the ETHW Core members remain anonymous, some prominent backers include ETH miner Chandler Guo, and (initially) TRON founder Justin Sun. However, Justin Sun later decided to back a rival fork.
Justin Sun–backed Poloniex was the first exchange to list the ETHW token. Other exchanges followed suit, and you can now buy ETHW on Gate.io, Phemex, MEXC, CoinW™ and DigiFinex.
Why Did the Ethereum Hard Fork Occur?
Forks usually occur whenever there are significant community disagreements on the trajectory of a cryptocurrency project. In a few cases, forks have been used as a means to attract funding for new projects.
Community members who are dissatisfied with the status quo or new modification on the project may initiate a hard or soft fork.
A hard fork represents a fundamental departure from the existing network protocol, invalidating previously valid blocks or revalidating invalid blocks. As a result, the network splits into two, and all nodes and users wishing to go with the new path must upgrade to the newest version of the protocol.
Bitcoin Cash (BCH), Bitcoin SV (BSV), Terra Classic (LUNC) and Ethereum Classic (ETC) are some of the notable crypto projects that resulted from a hard fork. EthereumPoW (ETHW) has joined the list of projects spun off from their original blockchain networks.
Reasons to Split
The $19 billion Ethereum mining industry relies on dedicated GPUs (or graphics processing units), which are computer chips well-suited for handling the heavy computational needs of crypto mining. These chips can’t be used to mine Bitcoin, since Bitcoin uses ASICs (application-specific integrated circuits).
Naturally, these expensive and massive GPU rigs will become redundant with the Ethereum switch to PoS. EthereumPoW supporters believe the PoW consensus mechanism was superior to PoS. Proponents of PoW see it as being more reliable, secure and simple, and supporting decentralization.
Ethereum founder Vitalik Buterin’s suggestion that ETH miners should switch their equipment over to mining Ethereum Classic (ETC), which he described as a “fine” alternative, hasn’t appeased the ETHW Core.
Chandler Guo, now the poster boy for the new EthereumPoW fork, disagrees with Buterin. He argues that ETC had no ecosystem and wasn’t sufficient. Guo said that some ETH miners felt their hands were forced by The Merge, and so a hard fork was imminent.
Forking the blockchain themselves also allows the ETHW Core to change the network as they see fit, including trying to send themselves coins on the brand new PoW blockchain.
Why Is EthereumPoW So Popular?
Even before The Merge, EthereumPoW was popular among Ethereum crypto enthusiasts who earn primarily from mining.
Miners have found validating Ethereum blocks to be lucrative. In a recent report made by Arcane Research, Ethereum PoW miners were able to pull in $18 billion in earnings for 2021, which is $1 billion over Bitcoin mining returns.
Given that miners have already invested in mining equipment, they don’t want to give up such a lucrative platform to switch to PoS.
ETHW Airdrops
Another major catalyst to the popularity of EthereumPoW is the recent batch of airdrops taking place.
Leading crypto copy trading platform Bitget, also one of the world’s biggest crypto derivatives exchanges, gave its users free ETHW during The Merge.
Post-Ethereum Merge, Bitget ran an ETHW airdrop campaign that would see 5,000 ETHW distributed in the reward pool. The airdrop campaign lasted for two weeks, starting on September 1, 2022 and ending on September 14.
The airdrop of ETHW tokens to users on the new chain will be made in a specific ratio following an already agreed-upon airdrop rule.
Crypto.com App Crypto Wallet and Crypto.com Exchange Spot Wallet will also be airdropping ETHW tokens to the wallets of its eligible users in the ratio of 1 ETH:1 ETHW.
The announcement of an ETHW mining service by Binance on September 29, 2022 led to a surge in the value of ETHW as users can enjoy mining ETHW for free.
ETHW Tokenomics
As of October 14, 2022, ETHW is trading at $7.12 per 1 ETHW, according to CoinGecko. There are over 106 million ETHW coins currently in circulation, with an equivalent total supply. According to CoinMarketCap, its 24-hour trading volume is over $55 million, with a low of $7.02 and a high of $7.66.
ETHW reached an all-time high of $58.54 on September 3, 2022, and all-time low of $4.17 on September 19, 2022.
Is ETHW a Good Investment?
Within a week of the fork going live, ETHW fell by over 80% to trade at $8.
Despite ETHW Core promises and the bravado of Mr. Guo, the new EthereumPoW didn’t quite take off as smoothly as planned. In fact, the preceding Ethereum Merge performed much better.
Right from the start, the hard fork was marred by technical issues. A faulty third-party contract exposed the network to a malicious exploit which resulted in the loss of 200 ETHW (~$1,600).
Additionally, many users complained of their inability to gain access to the EthereumPoW servers with the information provided by the blockchain.
As if that wasn’t enough, Justin Sun, Poloniex backer and one of the earliest promoters of the new project, did an about-face, supporting a previously unheard-of new Ethereum fork.
Support for ETHW
The project is off to a rocky start, but there may be reason to hope.
Gary Gensler, chair of the Securities and Exchange Commission (SEC), hinted that the existing Ethereum blockchain may be subject to regulation due to its new staking features, which could make it a security.
ETHW might not be subject to this regulatory issue, since it doesn’t offer staking features, which may enhance its appeal with investors.
In addition, several major crypto exchanges have revealed their support for EthereumPoW, including Binance, the largest crypto exchange in the world in terms of trading volumes. Binance announced via Twitter that it had launched a zero-fee ETHW mining pool.
Other exchanges that support the new Ethereum fork include Coinbase, OKX, Gate.io and Poloniex.
The recent and ongoing ETHW airdrops could also contribute to the growth of the EthereumPoW ecosystem, possibly adding to its community.
Lack of Stablecoin Support
Unfortunately, even before The Merge, the major Stablecoins — USDT and USDC — had not offered any support for the nascent project. Essentially, this lack of stablecoin support leaves EthereumPoW with little or no DeFi activity, since lending and collateralization are typically done using stablecoins.
Critics of the project have alleged that the only reason it was created was to hype the price with the usual gimmicks, and then dump the now worthless tokens on unsuspecting victims.
If the project can’t maintain interest and value, then the remaining miners may have no choice but to abandon their hopes. If mining isn’t profitable, continuing simply doesn’t make any sense. Many miners have ended up migrating to other blockchain networks, or been forced to shut down.
Those who followed Buterin’s comment about switching over to mining Ethereum Classic haven’t fared much better. As more miners switched to ETC, it became harder to successfully mine a block and reap rewards.
ETHW Price Prediction
A few days after the launch of ETHW, there was an initial bullish reaction, followed closely by weeks of a bearish trend which saw it drop as low as $4.17 on September 19, 2022. The token is currently experiencing a steady decline in value.
If ETHW follows in the footsteps of Ethereum Classic (ETC), an earlier fork from the original Ethereum, and Bitcoin Cash (BCH), a hard fork of Bitcoin, perhaps it can experience a slow increase in value.
According to DigitalCoinPrice, a renowned price-tracking platform for cryptocurrencies, the price of ETHW is bound to rise a few years from now.
However, the likelihood of a price increase depends on the ecosystem and community ETHW can build. Without the ability to support DeFi, the use case for ETHW is questionable. And, as always, the crypto market is highly volatile. No one can say for sure what the future holds for the EthereumPoW blockchain and ETHW coin.
If you’re an interested investor, make sure you DYOR — do your own research.
How to Invest in ETHW Tokens
ETHW holders can now trade their tokens on Bybit, one of the first few crypto exchanges to offer ETHW spot trading. Bybit gives users access to the ETHW/USDT trading pair. You can also trade ETHW perpetual contracts on Bybit. Get started by registering for an account.
ETH holders are also eligible to receive ETHW tokens via an airdrop. (Bybit account holders will have already received these forked tokens in their Bybit Spot accounts.) After adding ETHW to MetaMask, you can trade the tokens in your Spot account.
On desktop devices:
-
Click on Assets, which can be found in the top right-hand corner.
-
Search for ETHW, and the ETHW token option will then be displayed.
-
Click on Deposit, the first clickable option that will be presented. (Before this, however, make sure to have added some ETHW tokens with MetaMask.)
Once you ensure that your MetaMask is on the ETHW Mainnet, and at the point of depositing:
-
Copy the wallet address of your Bybit account.
-
Now, paste the same address in the destination address field provided on MetaMask.
-
Click on Send.
-
Wait for a few seconds. ETHW will appear in your Bybit Spot account.
To start trading on your desktop:
-
Click on Trade.
-
Select Spot.
-
Select your desired ETHW trading pair (for now, just ETHW/USDT). This will take you to the Spot Trading page of ETHW/USDT.
-
Check the right side of the spot trading page, and select Market
-
To Buy: Enter the exact amount of USDT you’re willing to trade in exchange for ETHW.
-
To Sell: Enter the exact amount of ETHW you’re willing to trade in exchange for USDT.
-
Whether you’re buying or selling, click on Sell ETHW or Buy ETHW
The Bottom Line
Hard forks are typically born of disagreements, and therefore subject to a fair bit of controversy. EthereumPoW seems to primarily serve the needs of ETH miners who could be bankrupted by the transition of Ethereum to the more earth-friendly PoS consensus.
The project had a rough take-off, and the team behind it still doesn’t seem to have a clear road map. Investing in ETHW comes with the risk that the community cannot sustain itself, though its developers are still certainly hopeful.