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Justin Sun’s Poloniex supports Ethereum proof-of-work hard fork

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Justin Sun’s Poloniex supports Ethereum proof-of-work hard fork

Justin Sun’s Poloniex supports Ethereum proof-of-work hard fork Oluwapelumi Adejumo · 12 hours ago · 2 min read

The crypto community does not think the proof-of-work chain will enjoy wide support from the industry when the merge is completed.

2 min read

Updated: August 4, 2022 at 6:27 pm

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Cover art/illustration via CryptoSlate

Justin Sun, Tron’s (TRX) founder, has revealed support for Ethereum’s (ETH) proof-of-work (PoW) hard fork.

In an August 4 tweet, Sun said he would donate some coins to the forked Ethereum PoW community to develop its ecosystem.

We currently have more than 1 million #ETH. If #Ethereum hard fork succeeds, we will donate some forked #ETHW to #ETHW community and developers to build #ethereum ecosystem. https://t.co/ee4kGSuVoK

— H.E. Justin Sun🌞🇬🇩 (@justinsuntron) August 4, 2022

His crypto exchange, Poloniex, announced that it would support any potential hard fork of Ethereum. According to its announcement, all ETH holders on the exchange will “receive the forked assets at a 1:1 ratio when the upgrade is completed.”

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The exchange also intends to list two potential forked tokens for Ethereum, ETHS, and ETHW, before the upgrade. Users can swap their ETH into any of the two forked tokens at 1:1.

Why EthereumPoW?

Chandler Guo, the influential Chinese crypto miner, pushing for the Ethereum PoW fork, told CryptoSlate that ETH’s transition to the PoS network will turn “miner’s income into stake income.”

When Ethereum finally migrates to a PoS network, the blockchain would have little need for miners as validators will use the existing ETH to validate blocks which will create new ETH and yield staking rewards after the merge. These validators would also be able to earn staking rewards.

We have received 83 donations since then. We’ve also got free servers, AWS credits, and voluntary engineers and designers from the community. We are so blessed to have you all! https://t.co/swN9cizKNI

— ETHPoW (@EthereumPoW) August 4, 2022

Meanwhile, a Twitter account belonging to the EThereumPoW community revealed that it has “received 83 donations, free servers, AWS credits, and voluntary engineers and designers” to help develop the ecosystem.

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Community views

The crypto community is reacting differently to the news of Justin Sun’s support for a PoW forked version of Ethereum.

According to George Harrap of Step Finance, this is just another stunt of Sun. Harrap said

There is already a PoW version of Ethereum (and) it is called Ethereum Classic (ETC).

Harsh Rajat, the founder of Ethereum Push Notification Service (EPNS), said:

The brilliance of decentralization is that in the end only the network effect matters and anyone who feels that things can be done differently can do those different things. I of course am all for ETH Merge and main Ethereum PoS chain but open source means that people who wants to do things differently can do those without any hiccup on tech restrictions, only how many people support them.

Ken Timsit of Cronos Chain said he does not anticipate the forked PoW chain getting enough decentralized application uses within the community because “PoS is good for the ecosystem and the environment.”

Market analysts from Bitfinex posited that:

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The prospect of a new fork to the Ethereum network in a proof of work form demonstrates a continual drive to innovate in the digital token economy … If new forks do emerge it will be interesting to watch how these chains develop. Given that some say we are now entering a “crypto winter,” now might be a good time for developers to build. Perhaps these forked chains will come to play a significant role in the ecosystem … Additionally, a future ETH1 PoW chain may reduce interest in ETC drastically.

BitMex

Circle to ‘fully and solely support Ethereum PoS’

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Circle to ‘fully and solely support Ethereum PoS’

Circle to ‘fully and solely support Ethereum PoS’ Oluwapelumi Adejumo · 8 hours ago · 1 min read

Circle said it would not have any problem with the Merge, and USDC will function efficiently on a PoS blockchain.

1 min read

Updated: August 9, 2022 at 5:42 pm

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Cover art/illustration via CryptoSlate

USD Coin (USDC) issuer Circle has revealed that it would fully support the Ethereum (ETH) proof-of-stake (PoS) chain post-merge.

According to an Aug. 9 blog post, the stablecoin issuer was looking forward to “the future scaling opportunities (the Merge) unlocks as well as the reduced energy consumption profile of the network.”

While we don’t speculate on the possibility of forks post Ethereum Mainnet merge, USDC as an Ethereum asset can only exist as a single valid “version,” and as stated previously, our sole plan is to fully support the upgraded Ethereum PoS chain.

Additionally, the issuer clarified it would not have any problem with the Merge, and USDC will function efficiently on a PoS blockchain.

Circle’s testing environment is connected to the Goerli Ethereum testnet, and we will monitor closely as it merges with Prater in the coming days.

It means the two largest stablecoins in the crypto space, USDT, and USDC, will not support any potential hard forks of ETH.

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Circle’s USDC is not only the largest fiat-backed stablecoin on Ethereum but also the biggest ERC-20 asset within the ecosystem.

Meanwhile, crypto exchanges like Huobi, OKX, Poloniex, BitMEX, and others have revealed that they would support ETH hard forks if there is enough demand in the market.

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ETH 2.0

MakerDAO identifies risks of an Ethereum hard fork

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MakerDAO identifies risks of an Ethereum hard fork

MakerDAO identifies risks of an Ethereum hard fork Oluwapelumi Adejumo · 36 seconds ago · 2 min read

MakerDAO said there are seven major risks to the protocol if Ethereum is forked.

2 min read

Updated: August 9, 2022 at 10:28 am

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Cover art/illustration via CryptoSlate

DeFi protocol MakerDAO (MKR) has identified seven risks its protocol faces if Ethereum (ETH) is forked.

Futures backwardation and negative funding

According to the protocol, the first risk it faces is future backwardation and negative funding.

In this case, while spot ETH will get forked PoW tokens, those exposed to ETH perpetual contracts and quarterly futures would not.

1️⃣ Futures Backwardation & Negative Funding.

Spot ETH would receive PoW forked tokens, while exposure to ETH quarterly futures or perpetual contracts would not.

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4/

— Maker (@MakerDAO) August 5, 2022

If this happens, it could cause a decline in the cost of leverage through futures contracts which will create competitive pressure on Maker vaults.

stETH discount

An Ethereum PoW hard fork post-Merge might lead to a stETH discount because staked coins are likely to become worthless.

Staked Ethereum is locked in and expected to be unlocked after the network upgrades to Ethereum 2.0.

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2️⃣ stETH Discount

stETH is likely to become worthless on any PoW Ethereum fork.

This is because further chain upgrades would be required to unlock staked ETH from the deposit contract, and there is arguably little economic incentive for the fork chain to accommodate this

11/

— Maker (@MakerDAO) August 5, 2022

But with a PoW hard fork, these staked coins would become worthless as they would remain locked until a network upgrade is done.

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The above may result in stETH’s value declining based on the expected value of the forked PoW ETH. For Maker, that represents a higher risk of stETH liquidity risks and downside volatility.

Additionally, a discount in liquid staking assets could incentivize leveraged staking behavior, increasing the “risk of negative price gaps while raising ETH supply rates on lending protocols.”

External assets

A forked Ethereum presents a challenge for external assets operating on the network. A fork would force centralized stablecoin issuers, cross-chain bridges, and others to pick an Ethereum chain.

3️⃣ External Asset Fork Choice

Ethereum hosts a broad variety of externally backed assets.

This includes cross-chain bridges, centralized stablecoins, and real-world assets.

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17/

— Maker (@MakerDAO) August 5, 2022

While some, like Chainlink (LINK), has expressed support for the Merge, there is the possibility that others could recognize ETH forks, given the level of traction it has gained recently.

Such actions may make their asset bridged into or out of Ethereum worthless, and any protocol that accepts such assets as collateral could have significant liquidity issues.

Liquidity pool protocols

Another challenge the protocol faces is the issue that faces liquidity pool protocols if Ethereum is forked.

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1️⃣ Liquidity Pool Protocols.

A significant subset of assets would become worthless in the hypothetical forked chain.

This could cause insolvency in lending markets, and incentivize users to borrow all available ETH as the asset most likely to retain some post-fork value.

4/

— Maker (@MakerDAO) August 8, 2022

According to the DeFi protocol, a significant number of assets could become useless if the network is forced, leading to insolvency in the lending market.

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Other risks

Additionally, the protocol faces other risks like oracle networks supplying bad data or network downtime during the Merge period, which could cause insolvency or liquidation for Maker vaults. Replay attacks could become more prevalent on both the mainnet and PoW chains.

This thread is focused on the following potential fork risks that could impact Maker:

1️⃣ Liquidity Pool Protocols.

2️⃣ Oracle Networks and Indices.

3️⃣ Network Downtime.

4️⃣ Replay Attacks.

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3/

— Maker (@MakerDAO) August 8, 2022

However, Maker has also identified ways to minimize these risks in the post. Most of the responses to the risk rely on communicating information about the risks to users.

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ETH 2.0

Vitalik Buterin calls out ETHW hard fork proponents as “trying to make a quick buck”

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Vitalik Buterin calls out ETHW hard fork proponents as “trying to make a quick buck”

Vitalik Buterin calls out ETHW hard fork proponents as “trying to make a quick buck” Liam ‘Akiba’ Wright · 5 seconds ago · 2 min read

Vitalik Buterin believes a proof-of-work hard fork of Ethereum is being pushed by “people who own exchanges trying to make a quick buck.”

2 min read

Updated: August 6, 2022 at 4:36 am

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Cover art/illustration via CryptoSlate

Speaking in a closed press conference during South Korea Blockchain Week, Ethereum founder, Vitalik Buterin, called people pushing for a hard fork of Ethereum to retain proof-of-stake “simply trying to make a quick buck.”

Justin Sun recently announced support for a hard fork of Ethereum post-merge by listing two new tokens on his Poloniex exchange. The tokens will be named ETHS and ETHW, related to proof-of-stake and proof-of-work, respectively. ETHW will represent a newly created hard fork of Ethereum where GPU miners continue to mine Ethereum after the merge of the Beacon chain. Some Chinese miners have reportedly signed up to be a part of this new chain in conjunction with Justin Sun.

Further, Sun is looking to incentivize a move to fork Ethereum to retain a version of the current network within a proof-of-work chain. He is offering up to 1 million ETHW to build a developer community should the chain become realized.

We currently have more than 1 million #ETH. If #Ethereum hard fork succeeds, we will donate some forked #ETHW to #ETHW community and developers to build #ethereum ecosystem. https://t.co/ee4kGSuVoK

— H.E. Justin Sun🌞🇬🇩 (@justinsuntron) August 4, 2022

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Vitalik stated that he has seen nothing but support for proof-of-stake from within the community and noted that most people who want to retain proof-of-stake are “outsiders” from the Ethereum ecosystem.

Justin Sun, the founder of the Tron blockchain, is undoubtedly an outsider to the Ethereum ecosystem by many accounts. Vitalik also referenced that proponents of a hard fork “own exchanges and are just trying to make a quick buck.”

Speaking on a question as to whether a hard fork could cause issues with NFTs living on both forked chains, Vitalik replied, “I foresee market confusion if that proof-of-work hard fork becomes something substantial.”

However, Vitalik quickly put the onus on the proof-of-work chain instead of accepting that this could cause issues with what many will consider “mainnet.” Should a fork gain traction, Vitalik expressed, “I’m sure there’s going to be problems… if they want to make a fork, it’s on them to mitigate those problems.”

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