Play Fusion: How to Get Free Money from Ethereum PoS Upgrade

Key points to remember

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

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

Prepare to merge

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

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

The fork, commonly referred to 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. Since the PoW fork starts from the pre-merger state of the Ethereum network, all token balances and smart contracts will also carry over. This means that everyone holding ETH on the chain will eventually have an equal balance of ETHW on the bifurcated ETHPoW chain. ETHW will only be native to the PoW fork and will represent an entirely different asset to the original ETH on Ethereum.

For many Ethereum believers, the planned PoW fork has little value as an investment. Virtually every DeFi, NFT, and network infrastructure protocol has publicly announced that they will support the PoS chain, leaving the PoW fork in a tough spot. When it launches, decentralized exchanges on the fork will likely stop working, and centralized stablecoins like USDC and USDT will be worthless, potentially causing mass liquidations and breaking many DeFi protocols.

Although the PoW fork should start from square one, there is one token that will likely have some value – ETHW. Like the 2016 DAO hack fork that created Ethereum Classic, the PoW fork might also have loyal supporters who continue to grow it, creating demand for its token. Conversely, those who don’t believe the fork will go anywhere may want to sell their ETHW tokens post-merger to pocket additional gains. But what’s the best way to ensure you receive your ETHW? Which exchanges plan to support the Ethereum PoW fork? Read on to make sure you get the most out of forking Merge and PoW.

Centralized exchanges

The easiest way to play Merge is to deposit 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 published statements:

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

Currently, it looks like Poloniex, Binance, MEXC Global, and Gate.io are the safest ones to give users their ETHW equivalent after the merger. Of these, Binance will likely have the largest market as it is currently the top centralized exchange by trading volume.

However, those unable or unwilling to deposit their ETH on one of these exchanges before the merger have another option. Holding ETH in a noncustodial Ethereum wallet ensures that your address will receive ETHW on the new PoW fork.

Jail

A non-custodial wallet should be the fastest way to access your ETHW after the merger. While users on centralized exchanges may need to wait hours or even days for their ETHW to access their accounts, taking control of your ETH funds is the surest way to guarantee that you will have access to your PoW fork parts.

However, the trade-off is that accessing the new PoW chain requires some technical knowledge and could put users at risk. Those taking this approach will need to add the PoW network to their EVM portfolio 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 ETH PoW chain name, RPC URL and chain ID (these details will be announced after the PoW chain is launched). The process is relatively simple, similar to adding RPC for other Ethereum compatible chains like Polygon or Avalanche.

Another consideration for those planning to self-hold their ETH pre-merger is consolidation. If your ETH is locked in a smart contract, sitting on a Layer 2 chain, or staked via a protocol like Lido, it will not be matched with ETHW on the PoW chain. To maximize the amount of ETHW you receive, it’s a good idea to convert your assets to normal ETH and keep them in your wallet before the merger.

Although using a non-custodial wallet will ensure that you will receive PoW fork coins, the limiting factor will be finding a market to sell them after the merger. Since all tokens in the forked chain except for ETHW will almost certainly be worthless, using decentralized exchanges is out of the question. Those wishing to withdraw cash will still have to wait for a centralized exchange to open ETHW deposits.

To ensure that you are prepared, consider creating accounts on the various exchanges that will support ETHW in advance. This way, those who want to can transfer their ETHW as soon as possible, potentially selling it for a higher price.

Finally, it is essential to understand the risks associated with the merger and any new PoW forks. A frequently mentioned hazard is that if an Ethereum fork launches with the same chain ID as the main PoS chain, transactions could be “relayed”. This is where transactions signed on a forked chain could be validated on the main Ethereum PoS chain, allowing new scams that potentially drain user wallets.

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

The latest estimates predict 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, be sure to do so well in advance. Most exchanges plan to halt ETH transactions a few hours before the merger to ensure that no user funds are lost, so don’t leave things to the last minute.

Whether you stick with exchanges or plan to hold your ETH yourself, check everything before sending transactions and stay safe.

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

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Play Fusion: How to Get Free Money from Ethereum PoS Upgrade

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