Ethereum PoW: should you bet on the ETHW token?

Updated 19 Sep. 2022 at 3:00 p.m.

The Merge Ethereum has been successfully triggered. Although it only happened a few days ago, the “old” Ethereum, that of Proof of Work, is already making people nostalgic. The latter forked the network and thus created Ethereum PoW. What is this new project really worth? Is it viable in the long term? Let’s see this together.

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What is Ethereum PoW (ETHW)?

Why was it created?

Over time, Ethereum has become a staple of blockchain technologies. Just behind the unbeatable Bitcoin, Ethereum is the second largest cryptocurrency ever created in terms of market capitalization.

Created by a group of geniuses including Vitalik Buterinthe network has also established itself as a leader in decentralized finance (DeFi) and its rivals are still far behind.

The blockchain owes its success to the attraction it has shown to minors. Indeed, it is one of the most profitable for the miners of the network and its industry would exceed the $19 billion.

This lucrative market is however challenged by the Moving from Proof of Work to Proof of Stake (PoS). Miners who have previously used the power of their machines to secure the network will have to put away their instruments to turn to staking, which is less profitable but much more energy efficient.

Faced with this announced loss of profitability, the only solution for blockchain players was to go back to basics with a Proof of Work consensus which, despite its high energy consumptionbrought them prosperity.

Miners could then have turned to the mother blockchain that is Ethereum Classic. However, this alternative did not seem to be suitable for miners who preferred to recreate networks in their image based on the functioning of the original blockchain.

Among these projects, Ethereum PoW (ETHW) was born from a fork of the Ethereum mainnet. The identity and number of its creators remain unknown but names are already circulating. Chandler Guo, a famous ETH miner, supports the project and seems to be among its initiators. The latter had also participated in the development of the Ethereum Classic network, the blockchain of which Ethereum is the fork.

Thus, Ethereum PoW turns out to be the fork of a forkthe third generation of Ethereum, a pro-miner network.

Tweet from ETHCPOW - ETHW
Tweet showing the Ethereum family of which Ethereum Classic is the original network

The main purpose of creating Ethereum PoW is to retain the initial consensus of the network. It is, to put it simply, to make an exact copy of the main network of the Ethereum blockchain. This copy will however have 2 major differences:

  • She will retain the consensus of Proof Of Work

This is the main objective of this manipulation. In order to retain the revenue generated by mining on Ethereum before The Merge, Proof of Work will remain at the heart of the new network. Thus, miners will be able to continue their profitable activity.

  • The removal of the Difficulty Bomb

The creators of this fork removed the Bomb difficulty. This mechanism was implemented on Ethereum in order to gradually increase the difficulty of mining and thus encourage miners to turn away from the Ethereum chain and ensure the transition to Proof of Stake.

The pro-miner network admits a native token dubbed ETHW. Currently, the tokenomics for this new token have not been updated. However, given the nature of this new token and its conditions of creation, tokenomics should be identical to those of its parent ETH.

Airdrop ETHW: targeting ETH holders

Some ETH holders have been offered ETHW on their wallet. This is particularly the case for users of the FTX platform which distributed ETHW tokens.

Distribution of ETHW on FTX

This nice surprise is not quite an airdrop. Indeed, remember thata hard fork divides a blockchain into two separate networks. It duplicates all the assets present on the initial chain. This also includes all on-chain tokens, NFTs and native coins, as well as liquidity on dApps.

Thus, by owning ETH tokens before The Merge and before the creation of the Ethereum PoW network, users are eligible to receive ETHW.

If a user had 1.5 ETH before the Ethereum Pow fork was created, the latter will receive 1.5 ETHW for free and without any manipulation.

However, although the quantity remains the same, the value is different because, although the form is relatively identical, the background is very different and the value of these new tokens cannot reach that of its parent.

1663595673 52 Ethereum PoW should you bet on the ETHW token

Although miners are more than determined to do Ethereum PoW, a dominant networkit turns out that this initiative is not to the liking of all market players.

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Can Ethereum PoW (ETHW) be a reliable investment?

This is the question asked by those who are currently in possession of ETHW tokens: “should I keep them? “.

Of course, the answer is not necessarily obvious.

On the one hand, the hope of seeing this token explode and reaching heights pushes holders to keep these tokens received for free.

On the other hand, the events of the past few days suggest that there is real doubt as to the sustainability of the project.

First of all, the evolution of the price of the token does not bode anything significantly positive. Indeed, launched for the first time last August, it was trading at the time around $121. It has since continued to fall. Today, this value has fall at $5.20.

ETHW/USD price
The value of the ETHW token has fallen by 96% since its launch in August 2022
Source : CoinMarketCap

Beyond its value, there are several clues that cast doubt around the project. This is particularly the case for the biggest players in the crypto universe having showed their disapproval against Ethereum PoW.

Firstly, stablecoins play a major role in the adoption of the Ethereum PoW chain. Indeed, the latter cannot support their offer on both channels at the same time. That is why Circle’s USDC and USDT from Tether have decided to support the main blockchain.

Following these decisions, the Ethereum PoW team decided to temporarily freeze stablecoins present in some liquidity pools of DeFi protocols. The official purpose of this blocking is to protect users. They didn’t like it.

This situation is similar among the oracles, whose leader chain link,. The latter also announced its support for the Ethereum blockchain.

OpenSea for NFTs and Aave on the DeFi side have imitated Chainlink and have chosen to position themselves massively on the side ofEthereum Proof of Stake.

This lost support reveals real handicaps for the development of the project. They mark a lack of commitment to developers but also to users.

Certainly, the intentions of miners upset by Ethereum’s switch to Proof of Stake are commendable and understandable. We can all the same ask ourselves the question, as a user, of its real usefulness.

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Ethereum PoW: should you bet on the ETHW token?

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