Ethereum / Unsplash
On September 15, The Merge update took place on the main Ethereum network, which transferred the altcoin from the Proof-of-Work protocol to Proof-of-Stake (PoS). Now, the security of the blockchain of the second largest cryptocurrency by capitalization is provided not by miners, but by validators – users who deposited and blocked their share of coins (staking).
Within a day after the update, a hard fork of the network called Ethereum PoW was launched, which still supports mining. The largest crypto exchanges, including Binance, Poloniex, announced support for this version of the network and credited users with ETH and WETH with new ETHW tokens at a ratio of 1:1.
The initiator of the hard fork was the famous Chinese miner Chandler Go. This is not the first time it has supported keeping the old version of Ethereum. In 2016, when another hard fork resulted in “Ethereum Classic» (ETC), a Chinese miner was the main proponent of its creation.
After the launch of the network, thousands of miners who were forced to stop mining Ethereum switched to EthereumPoW pools. The rate of the coin before the launch of the project reached $50, but dropped to $4 in a few days, after which it recovered slightly, according to CoinGecko. As of October 18, 11:30 a.m., the price of the token fluctuates around $7, the market capitalization is $762 million, with a daily trading volume of $28.8 million.
Experts told RBC-Crypto about what happened to the new ecosystem in the month that has passed since its launch, and what can be expected from the project in the future.
Ethereum PoW today
The main problem of the Ethereum PoW project is the lack of media coverage, says Nikita Zuborev, senior analyst at Bestchange.ru. He explained that without constant mentions of the project in the information field, it may not receive sufficient support and liquidity to ensure stable growth.
“We hardly hear anything about ETHW. This is an unaffordable luxury for ideological projects like a breakaway segment of the ecosystem, ”the expert believes.
In addition, Zuborev noted that the market as a whole is in a global bearish trend, so non-key assets such as ETHW are fading into the background. And their fall due to the redistribution of capital (into less risky assets) can be much more noticeable than the fall of the leading cryptocurrencies, the analyst believes.
He also drew attention to the fact that the initial free distribution of a large number of tokens to hundreds of thousands of investors negatively affects the project. The expert explained that many of the owners of these coins increase the pressure on the auction and sell the received coins at any price.
During the month that has passed since the launch of the Ethereum PoW network, the listing on crypto exchanges can only be called the success of the project, says a popular analyst on TradingView under the pseudonym Age_of_Crypto. According to him, the main activity and indicators of the project in this period of time appeared only due to the airdrop (distribution) of coins among ETH holders, which occurred immediately after the hard fork, and the subsequent movement of the ETHW token to the exchanges.
Since the fork, the price of ETHW has lost about 80%, while ETH has lost only 20%, the expert noted. He also pointed out that none of the significant Ethereum infrastructure projects have switched to the new PoW version.
Prospects for the project and the ETHW token
Sooner or later, the price of the Ethereum PoW cryptocurrency may reach a plateau at the level of supply and demand parity, Zuborev believes. The expert also suggested that if the price stabilizes, a serious explosive impulse to growth is possible against the backdrop of a change in the market trend. Tentatively, this can happen in 2024-2025 with the start of a new “alt season”, the analyst suggested.
He explained that this can happen provided that the project is not abandoned until then, that the previously defined market cycles continue to operate, and that the global economy does not enter a “steep peak” amid serious socio-political and economic problems.
At the same time, the number of miners not only does not decrease, but the network hashrate even gradually grows, the expert noted. He clarified that this indirectly indicates the preservation of a part of the community around ETHW and serves as a positive factor with a delayed effect.
One of the unclear points so far, the expert called the possible reaction of the community and Ethereum validators if the statements of the US economic bloc regarding all PoS coins become a new global trend. US regulators are increasingly paying attention to the fact that such assets meet the definition of securities. That is, staking will be taxed in one form or another, with all the legal features of owning such assets, the specialist specified.
Among other things, the future of Ethereum PoW will depend on whether key Ethereum decentralized applications are deployed on the “new old” network, the analyst is sure. According to him, they are the main driver of the growth of the Ethereum ecosystem. Without them, the fork is doomed to a protracted failure and depreciation with the transformation into a junk asset for “pump-and-dump” manipulations, Zuborev believes.
As an investment asset, the ETHW token should not be considered now, according to an analyst at TradingView. In his opinion, most likely the same story will repeat with this coin as with BTG (Bitcoin fork of BTC Gold) – at the moment, the Binance platform is going to delist this token.
An energy crisis is looming in the world, and this is not the best time for PoW blockchains, the expert says. According to him, we should expect strong speculation on this issue from the beginning of next year. For short-term trading, this cryptocurrency is also unattractive, there are assets with more understandable charts and fundamental indicators, the analyst concluded.
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