CoinShares analysts skeptical about the prospects of a potential Ethereum fork after the mainnet’s transition to the Proof-of-Stake consensus algorithm.
“Some miners have signaled support for an Ethereum fork that will not switch to Proof-of-Stake, but will remain on Proof-of-Work. From a technical point of view, this fork would not affect the current version of Ethereum, that is, the updated ETH2 network,” the analysts said.
They noted that there could be some price volatility in the future, excluding “direct on-chain risks”.
CoinShares listed the main factors why the upgraded Ethereum would come out ahead of the situation:
- the current network has more social support — from the Ethereum Foundation and the broader community. This is evidenced, in particular, by the drop in GPU prices;
- stablecoin issuers will have to choose a chain. They will almost certainly stay with ETH2, “for reputation and regulatory reasons”;
- wrapped tokens like WBTC and RenBTC would lose value on the alternative chain, “since they cannot be redeemed using the underlying asset”;
- the new PoW version of Ethereum would require a hard fork to remove from the code the “difficulty bomb”. Otherwise the blockchain “will become unusable”;
- in the context of ETHPoW, tokens and rewards involved in staking “will become unrecoverable.” They cannot be distributed as intended.
“That does not mean exchanges will shun listing ETHPoW if/when this fork appears,” — the CoinShares researcher Mark Arjun noted.
In his view, many will sell the hard fork coins for the upgraded Ethereum.
“I’m not sure that the potential value of ETHPoW is close to the ETH2 price,” — stressed Arjun.
As of writing, the price of derivative tokens based on the potential fork stands at $101, according to CoinMarketCap. Ethereum’s market value more than 17 times exceeds the ETHPoW figure.
Earlier, the exchange BitMEX introduced derivatives on ETHPoW tokens of the potential fork of the second-largest cryptocurrency.
Huobi said it would take steps in support of the potential fork after “obtaining a broad view of user opinions” and if the assets meet listing rules.
Trading platforms Digifinex and OKX have also begun assessing the implications of a possible second-largest cryptocurrency split.
Representatives of the DeFi platform DeBank stated that they will not support the Ethereum fork on the PoW algorithm.
As reported, Chainlink have taken a similar decision.
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