The DeFi community is pumped. Ethereum just completed its dress rehearsal before The Merge — the Goerli testnet passed on Wednesday — and ETH has soared 72% in the last 30 days.
Even so, die-hards devoted to pre-Merge Ethereum are preparing to carry on trading tokens tied to the Proof-of-Work consensus mechanism the network has employed since its founding seven years ago.
Last week, the crypto exchanges Poloniex and MEXC Global said they would continue to support the trading of tokens tied to a PoW fork of Ethereum. BitMEX, the crypto derivatives platform co-founded by Arthur Hayes, launched a futures contract called ETHPoW on Tuesday.
In a blog post, the BitMEX team mused on whether the ETHPoW fork would be sustainable and spawn a new token.
“If the PoW chain remains alive and continues to be extended some are speculating this coin could be called ETHPoW,” said the blog. “In our view it is likely that the chain is extended past the merge point, however whether or not this chain has any economic significance is an open question.”
In its most sweeping upgrade to date, Ethereum’s mainnet is poised to merge with the Beacon Chain, a Proof-of-Stake-based system, this September.
Unlike PoW, PoS-based blockchains validate transactions and extend their ledgers by calling on tokenholders to stake their coins in collaboration with one another. PoW systems like Bitcoin rely on miners who compete to add blocks to the chain, a model that demands mammoth loads of computing power and exacerbates global warming.
PoS is considered more secure, less energy-intensive, and better for implementing new scaling solutions.
In anticipation of The Merge, Ether has performed more than three times better than Bitcoin over the last 30 days, according to data from CoinGecko.
The Merge has, however, received strong opposition from those who have invested billions of dollars in mining infrastructure and don’t want to see their assets depreciate. They threaten to fork the initial Ethereum blockchain and build their own branch of PoW network to resist the change.
Crypto companies are divided on the proposed PoW forks, as the market conditions are still unclear.
Poloniex explained in a post that ETH 2.0’s Merge upgrade could potentially create two parallel blockchains, and the new protocol will still be operating under a PoW consensus. ETH holders will be allowed to swap the token into ETHS and ETHW at a one-to-one ratio.
“If the ETH 2.0 upgrade ends up with more than one chain, ETHS will be automatically converted into the upgraded ETH at a 1:1 ratio and the ETHS market will be delisted,” the post said. “After the hard fork, the PoW chain with the most hashrate will serve as the main chain of ETHW. ”
Poloniex also said the Merge could bring huge uncertainties to its operations. The tokens might lose all the value if there is not enough support from developers or community members.
The ETHS token is trading around $1,664, almost the same price as ETH, while ETHP is at a much lower price around $112.
Many other crypto exchanges started out their post-merge preparations but are still “evaluating the demand” and haven’t given enough details about their plans.
Jay, CEO of OKX tweeted on Monday that they could “list the newly forked coins if there is sufficient demand”.
Last Friday, Huobi, a crypto exchange founded in China, wrote a response to the potential ETH hard forks, saying that it would support any forked assets of Ethereum as long as they meet the requirements they listed.