Merge is up, but where are my forked coins?
CRYPTODAY 097
The crypto community’s most anticipated milestone went off without a hitch on Thursday afternoon Manila time, with block number 15,537,393 officially drawing Ethereum’s Proof-of-Work era to a close. I watched a community-led livestream as they monitored the transition and featured core dev folks like Vitalik Buterin and Tim Beiko. I was struck by how low-key the whole thing was. In meatspace (i.e., the “real” world), we have fireworks and ribbon-cuttings and confetti and champagne. In the cypherpunk-led metaverse, we stare at server logs. I don’t know how many people were watching at the time, but there was half a trillion dollars on the line with this transition, and there wasn’t a suit or blazer in the entire livestream. Instead we got polymaths in t-shirts huddled around a single webcam, applauding lightly as nodes worldwide began signaling their Proof-of-Stake support by way of panda ASCII art. In many ways, it was the perfect crypto moment, something that I’ve not really seen since the early Bitcoin days.
Sadly, the markets haven’t responded all that well post-Merge. The overall crypto market cap has lost about 3% since the 15th, with Ethereum itself dipping about 10%. This drop was echoed in the traditional stock market, with the S&P 500 plunging 3% this week. All of this was triggered by news earlier on Wednesday about US inflation remaining at a stubborn high (over 8%), which leads us to believe that there will be another interest rate hike announced by the Federal Reserve next Wednesday. (Check out my Inflation explainer for more details on how this negatively affects the crypto price.)
Of course, for a lot of people the Ethereum Merge was more interesting for the possible revenue opportunities it presented. As a quick refresher: thousands of Ethereum mining operations have been rendered obsolete by the move to Proof-of-Stake. Some of them have banded together to split off from the main Ethereum chain and create their own forked network, called EthereumPoW or $ETHW. The new token went live on a variety of exchanges a few hours after the Merge finalized. Bybit announced their support for ETHW/USDT leveraged trading on Friday, but as far as I can tell, no centralized exchange has yet announced an airdrop schedule for all the ETH holders on their respective platform.
In contrast with the smooth ETH merge, the ETHW launch was pure amateur hour. In the crypto world, new blockchains can pick an arbitrary ID number to represent their chain, which helps multi-chain wallets like Metamask to identify one chain (Ethereum’s Chain ID is #1) from another (Binance Smart Chain’s Chain ID is #56). You can see the whole list on chainlist.org. The issue with ETHW was that they picked a Chain ID (10001) that already belonged to a different blockchain. Ironically, it was the ID of another forked token, Bitcoin Cash. Although the Chain ID is just a harmless label, this mistake triggered warning messages within the Metamask wallet app when users attempted to connect to the new ETHW blockchain. It looked like they were mistakenly trying to connect to Bitcoin Cash, causing not just confusion but uproarious SMH vibes across the community. As of this writing, ETHW still hasn’t updated their ChainID to something else.
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