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Proposed ETHPoW Fork Poses An Existential Threat To Ethereum. Can It Succeed?

The ETHPoW fork proposal comes from the miners. It’s only logical that they want to keep Ethereum as a Proof-Of-Work chain, since all of their profit will evaporate overnight with the change to Proof-Of-Stake. The merge is supposedly only weeks away, and the Ethereum community has their hearts set on the proposed changes. Nevertheless, the miners have the right to fork the chain, and that’s where ETHPoW comes in.

ethpow will coming soon pic.twitter.com/v9eAbWO2BZ

— Chandler Guo (@ChandlerGuo) July 27, 2022

Our friends at Arcane Research set the stage for ETHPoW in their The Weekly Update report:

“Last week, Chinese Ethereum miner Chandler Guo launched a campaign to hard fork the Ethereum blockchain. In the beginning, both chains would be identical, duplicating any holdings. However, although the network can be technically duplicated, the value cannot.”

A year ago, we at Bitcoinist theorized about this exact situation in an article titled “Does DeFi Make Ethereum Unforkable? Here Are The Facts.” The ETHPoW saga wasn’t even on the horizon, but we said:

“Even though it’s conceivable that some of the other projects could maintain two versions, one in each blockchain, in the case of stablecoins this is simply not possible. In the thought experiment, the authors use CENTRE’s USDC.

“USDC is a system of record for dollar-backed IOUs. Only one system of record can correspond to the real liabilities of CENTRE, and so the USDC ledger is effectively meaningless on the other chain.”

Ethereum Mining Revenue: 30 Day Moving Average | Source: The Weekly Update
The Destiny Of ETHPoW Is In The Hands Of The Stablecoin Issuers

So far, Tether is yet to speak on the matter, but Centre said it will not support ETHPoW. This makes the miners case much less compelling, since as the study we cited says, “given how deeply entangled it all is, it’s incredibly challenging to extricate it quickly and safely.” Our conclusion on the thought experiment was simple, “The incentives are undeniable, “all of DeFi is forced to move together.” And it looks like DeFi will support the Proof-Of-Stake chain.

So, if there’s no way that this plan is going to work for ETH miners, why are they going through with it? Back to The Weekly Update, they pose a theory. “If stablecoins are worthless on the PoW chain, DeFi on PoW crumbles. But some exchanges will list ETHPoW, causing speculation on the asset and a race to extract as much ETHPoW from the dead ecosystem as possible.”

Is the miners’ plan that shortsighted? Or do they have an ace up their sleeves?

ETH price chart for 08/09/2022 on BinanceUS | Source: ETH/USD on TradingView.com
Incredible Technical Challenges Ahead

In an open letter to Ethereum miner Chandler Guo, The ETC Cooperative laid down the case against ETHPoW. And their reasoning goes into technical matters that are above most of us’ paygrade. For example:

“This time you will need to fork Geth (and probably also Erigon, Besu and Nethermind). Each of those codebases will need to have the POS transition logic removed, to have the difficulty bomb disabled and also to update
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