The Merge is closer than ever, but not everyone is happy about it.
Well-known crypto miner Chandler Guo has started a campaign to fork Ethereum and create a proof-of-work version that will compete with the soon-to-be proof-of-stake (PoS) Mainnet.
This idea has started a debate on what would happen if EthPoW, as it is being called, actually did happen.
Before discussing any of the implications of an EthPoW, we have to talk about why Chandler would want to fork Ethereum in the first place.
Those of you who have been around crypto for a while might recognize Chandler as one of the leaders behind the Ethereum Classic fork. However, this situation is entirely different. There is minimal controversy behind The Merge, and it is widely agreed The Merge is good for Ethereum. So, why then is Chandler pushing for EthPow?
The answer is simple: he financially benefits from an EthPoW.
Chandler is a miner. The Merge would move Ethereum to PoS, making mining irrelevant. Not only would miners no longer be able to make money, but their expensive mining equipment would become useless.
Understandably, that is an outcome Chandler and other miners want to avoid.
Problems With EthPoW
Even if EthPoW were to happen, it’s by no means guaranteed to be a success.
Mining is profitable because ETH is valuable, and ETH is valuable because the Ethereum blockchain is valuable.
EthPoW would be an entirely different blockchain from Ethereum and thus would inherit none of its value. It would basically be starting from scratch. Would EthPoW gain enough traction competing against the new PoS Ethereum and the proof-of-work Ethereum Classic to make mining profitable?
Who knows, but it appears to be unlikely. And judging off the recent record-high volume in ETH derivatives, it doesn’t look like large traders are losing sleep over EthPoW.
An Uncomfortable Hypothetical
However, not everyone is sold that EthPoW isn’t a threat. Crypto hedge fund Galois Capital recently caused a stir on Twitter with their thoughts on a proof-of-work fork. Galois argues that there is a non-trivial chance that:
- The Merge fails because of unforeseen technical issues.
- EthPoW is created.
- Because of their ties with the Asian mining community, Tether sticks with EthPoW instead of migrating to the new PoS ETH.
It goes without saying that this would not be an ideal scenario for the new PoS Ethereum. Tether is the largest stablecoin issuer in the world. To lose them would be a big hit that is hard to replace.
Although these hypotheticals have a low probability of happening (2-5% according to Galois), they show that even though The Merge appears to be very bullish for Ethereum, there are still scenarios in which it fails.
It’s important to always consider the full range of outcomes before investing in anything, especially in something as volatile as crypto. At CoinSnacks, we will keep ensuring that you hear both sides of every story so that you can make the best decisions for yourself.