The analysts looked into the possibility of a split in Ethereum when the Merge happens, resulting in the expected Ethereum 2.0 and a new ETHPoW blockchain. The Merge is the much-anticipated moment when Ethereum transitions from proof-of-work (PoW) to proof-of-stake (PoS). But not everybody is looking forward to it – specifically the PoW miners – so the team looked into the viability of a chain that would continue working on PoW, which they said “may provide an exciting opportunity for traders and speculators in the short to medium term.”
The ETHPoW chain “is almost guaranteed to be a minority chain with respect to the coin price and economic chain usage,” the analysts said, arguing that,
“Although there are many technical challenges that ETHPoW faces, as long as the chain survives, it looks likely that there could be positive narratives around the coin and leading centralized exchanges are likely to list it.”
It is not easy to guess if and how long such a chain would live, but it stands a chance, and each of the challenges the researchers listed appears to have a solution of some sort, albeit some more difficult than the others. One of the major ones is the already postponed Ice Age that will be set off by a difficulty bomb – meant to make the PoW mining network difficulty exponentially harder as time progresses until it becomes impossible to mine.
“If the PoW chain is going to persist in the long run, it may need a new hardfork client to permanently remove the ice age feature,” said the researchers. This would need a series of events, including a removal hard fork, developers willing and able to make a new client, and exchanges and custodians willing to support the new client, among others.
The analysts claim, however, that.
“[I]n practice these problems could be overcome fairly easily and the size of the ETHPoW community is not likely to be especially large and therefore this may not be a major problem. It could be a few large miners behind the scenes financing the whole operation.”
Other issues include the question of the staked ETH on the beacon chain, which may potentially be worked on when the new hardfork ETHPoW client is released.
Per the researchers, “what everyone should actually be doing” is buying ETHPoW after the Merge occurs. As it will take centralized exchanges a few days to list the new coin, “the best strategy may actually be” to buy ETHPoW on decentralized exchanges and sell it later on centralized exchanges when it is possible.
As reported, Ethereum developer Tim Beiko suggested September 19 as a possible Merge date. That said, BitMEX researchers noted that,
“It is worth pointing out that even after the Merge, stakers won’t be able to withdraw their staked Ethereum back into the execution layer, this “second merge” could be another 6 to 12 months away.”
– Vitalik Buterin says The Merge is Not ‘Priced in’ as Investor Promises to Fork Ethereum
– Vitalik Buterin Confirms Post-Merge Ethereum Centralization Concerns, Urges Not to ‘Overly Catastrophize’ It