Last Thursday’s Ethereum ‘merger’ has so far been considered a technical success, but that’s a different story for the few network forks looking to retain some of the world’s second-largest blockchain using power-intensive proof-of-work (PoW) consensus mechanism.
Fearing that Ethereum’s transition to a proof-of-stake (PoS) mechanism could end their revenue stream, several PoW forks have emerged to keep ETH miners running.
But plagued by technical issues and plummeting token prices, these networks also lack the backing of many major exchanges or Ethereum developers, said Charlie Karaboga, CFO and co-founder of Australian fintech blockchain company Block Earner. . Forkast in a written statement.
“The general opinion in the crypto community is that none of these forks will generate significant demand,” he said.
Ethereum miners are important players in the Ethereum ecosystem; however, if their PoW forks aren’t widely adopted, they’re unlikely to generate the revenue they were looking for by building the network in the first place.
One of the major forks known as ETHPoW went live with its mainnet shortly after merging with its native currency ETHW. Led by prominent Chinese miner Chandler Guo, this fork has developed a following as a viable alternative in the run-up to the merger.
Originally issued as an IOU before going live, ETHW saw high price volatility on the day of the merger before dropping 68% to $8.01 over the next 24 hours. .
Ethereum holders have been notified that they will receive airdropped ETHW tokens once the fork goes live; however, a mix-up in the network’s new chain ID – an identifier that points to a unique network – has meant some users have not received the new token while scammers have been quick to step in to get the most out of it. confusion.
The problem was that the ETHPoW developers mistakenly assigned the chain ID 10001 to the network, which was already used by the Testnet Smart Bitcoin Cash token, leading to error messages on crypto wallets when trying to adding network.
Although the issue was quickly changed, the price of the token has since continued to decline and was trading at US$5.21 as of 4:15 p.m. in Hong Kong on Monday.
Another major fork goes by the name of EthereumFair, or ETF, who claims for being the first forked PoW chain, experienced the same trading volatility soon after the merger.
The ETF fell 88% to US$2.05 in the following days, although it has since seen a recovery to US$4.61 as of 4:15 p.m. in Hong Kong on Monday.
Karaboga said Forkast he was not surprised by the drop in prices.
“Many PoS supporters waited for their free airdrop once the merger was confirmed,” he said. “To make a profit, they very quickly sold these assets in the supported markets. The massive sale of assets drove prices down.
While he expected little adoption later, Karaboga added that without developer support, the long-term success of these tokens would likely be limited.
PoW forks face another major hurdle. The new PoW model of ETH is believed to be around 99.95% more energy efficient than its PoW predecessor.
“Climate change concerns make it difficult for these forks because their models are not outwardly environmentally conscious, where the new PoS model is,” Karaboga said.
PoS skeptics argue that the trade-off for this energy efficiency is the risk of increasing network centralization – a concern that seems to have arisen.
In the first hours following the merger, the analysis Santiment firm reported that 46.15% of Ethereum PoS nodes are controlled by just two addresses.