The Ethereum “Merge” is imminent — an event that intends to shift the Ethereum blockchain from its current proof-of-work (PoW) consensus mechanism to proof of stake (PoS), the latter being regarded as faster, uses less energy, offers more security, and is better for scaling projects. It’s expected to happen on Sept. 15 or 16.
But miners who are unwilling to give up their operations are rallying to try to create forks that will keep running on the proof-of-work system so as to maintain their mining business.
Most analysts are not bullish on the prospect of the possible PoW fork — for example, crypto exchange BitMEX’s research said the PoW fork will eventually wither due to the lack of DeFi ecosystem.
However, crypto exchanges including some major ones, such as Coinbase, Binance, OKX, Poloniex, BitMEX, MEXC Global, Gate.io, have revealed their support for a potential PoW token.
“There will be a lot of volatility and speculation around the launch of an ETH PoW token. This will provide opportunities for canny traders to turn a profit, and some exchanges are looking to piggyback on this process,” Charmyn Ho, head of crypto insights at Bybit, told Forkast. Bybit is also one of the exchanges that will support the potential PoW fork.
Behind the actions of exchanges is an opportunity for investors to potentially profit from a PoW fork. After the potential fork happens, “everybody will get free money,” said one of the PoW fork leaders, Chandler Guo, in a Bloomberg interview.
BitMEX pointed out in a research report that once the PoW fork becomes a reality, Ether holders will get the same amount of ETHPoW token on the PoW fork chain and can profit from selling the ETHPoW tokens.
David Z. Morris, CoinDesk’s Chief insights columnist, said in an article that he’ll move the Ethers from exchanges to local addresses and wait until the fork happen, then sell most of the PoW tokens received from the fork via an available exchange as soon as possible, and “buy myself a sandwich or a gold watch.”
“It’s one of the best opportunities for tier 2 exchanges to attract users and to benefit from this merger,” said Iakov Levin, founder and CEO at crypto lender Midas Investment.
Investors may already have started taking action. Ethers are outflowing from exchanges — Ether deposits on exchanges reached a one-month low on Thursday, while Ether outflows from exchanges reached their highest in a month.
The addresses hoarding Ethers are rising. On Thursday, addresses holding more than 10 Ethers reached an all-time high, while addresses holding over 10,000 Ethers reached a three-month high.
“And obviously you have really a huge amount of volumes for this part, there will be a lot of speculation,” Levin told Forkast.
There are 120.33 million Ethers supplying the market as of Aug. 31, according to crypto data website YCharts. There would be the same number of tokens on a PoW fork chain.