Ethereum merge

Cardano bulls run out of steam after Vasil hard fork — 40% ADA price crash in play

Most Cardano hard forks have preceded ADA price crashes, and Vasil looks no different.

Cardano’s (ADA) long-awaited Vasil update went live on Sept. 22, which promises to make its blockchain more scalable and cheaper than before. However, this has failed to bring bullish momentum to the ADA market.

Sell-the-news hampers Cardano

ADA’s price has dropped by approximately 9.5% since the update and was changing hands for $0.43 on Sept. 26. The ADA/USD pair’s drop was accompanied by a rejection candlestick on its daily price chart, confirmed by a brief rally to $0.48 on the day of the fork and a sharp correction thereafter.

ADA/USD daily price chart. Source: TradingView

ADA bulls’ muted reaction to the successful Vasil update is similar to what transpired across the Ether (ETH) market after Ethereum’s Merge.

In other words, a buy the rumor, sell the news event, resembling most of Cardano’s previous hard forks, which have a history of preceding ADA price crashes, as shown below.

ADA/USD three-day price chart. Source: TradingView

In addition, macro risks led by a very hawkish Federal Reserve also weighed down ADA’s bullish expectations post-Vasil.

The U.S. central bank’s decision to raise its benchmark rates by another 0.75% came within 48 hours before the Cardano update. ADA fell alongside risk-on assets in response, given its consistent positive correlation with stocks throughout 2022.

As of Sept. 26, the correlation coefficient between the Cardano token and the Nasdaq Composite was 0.83.

ADA/USD and Nasdaq daily correlation coefficient. Source: TradingView

ADA price eyes 40% crash

Meanwhile, ADA’s technicals are painting a descending triangle pattern for a bearish outlook in the near term.

Related: Charles Hoskinson and ETH dev get into a war of words post-Vasil upgrade

Theoretically, a descending triangle in a downtrend acts as a bearish continuation signal, meaning it resolves after the price breaks below its support trendline decisively. In doing so, the price falls by as much as the maximum triangle height.

ADA/USD three-day price chart featuring descending triangle breakdown setup. Source: TradingView

Therefore, a breakdown below ADA’s triangle support of $0.41 could have its price crash toward $0.25. In other words, a 40% price decline by the end of 2022.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

ETHW confirms contract vulnerability exploit, dismisses replay attack claims

The proof-of-work fork of the Ethereum blockchain was targeted by a cross-chain contract exploit.

Post-Ethereum Merge proof-of-work (PoW) chain ETHW has moved to quell claims that it had suffered an on-chain replay attack over the weekend.

Smart contract auditing firm BlockSec flagged what it described as a replay attack that took place on Sept. 16, in which attackers harvested ETHW tokens by replaying the call data of Ethereum’s proof-of-stake (PoS) chain on the forked Ethereum PoW chain.

According to BlockSec, the root cause of the exploit was due to the fact that the Omni cross-chain bridge on the ETHW chain used old chainID and was not correctly verifying the correct chainID of the cross-chain message.

Ethereum’s Mainnet and test networks use two identifiers for different uses, namely, a network ID and a chain ID (chainID). Peer-to-peer messages between nodes make use of network ID, while transaction signatures make use of chainID. EIP-155 introduced chainID as a means to prevent replay attacks between the ETH and Ethereum Classic (ETC) blockchains.

BlockSec was the first analytics service to flag the replay attack and notified ETHW, which, in turn, quickly rebuffed initial claims that a replay attack had been carried out on-chain. ETHW made attempts to notify Omni Bridge of the exploit at the contract level:

An analysis of the attack revealed that the exploiter started by transferring 200 WETH through the Omni bridge of the Gnosis chain before replaying the same message on the PoW chain, netting an extra 200 ETHW. This resulted in the balance of the chain contract deployed on the PoW chain being drained.

Related: Cross-chains in the crosshairs: Hacks call for better defense mechanisms

BlockSec’s analysis of the Omni bridge source code showed that the logic to verify chainID was present, but the verified chainID used in the contract was pulled from a value stored in the storage named unitStorage.

The team explained that this was not the correct chainID collected through the CHAINID opcode, which was proposed by EIP-1344 and exacerbated by the resulting fork after the Ethereum Merge:

“This is probably due to the fact that the code is quite old (using Solidity 0.4.24). The code works fine all the time until the fork of the PoW chain.”

This allowed attackers to harvest ETHW and potentially other tokens owned by the bridge on the PoW chain and go on to trade these on marketplaces listing the relevant tokens. 

Cointelegraph reached out BlockSec to ascertain the value extracted. Yajin Zhou, BlockSec CEO, said his team had not conducted an accurate calculation but highlighted a limit on wrapped ETH transfers (WETH) through the Omni Bridge:

“The bridge has a limit on how many WETH can be transferred. The attacker can only get 250 ETHW per day. Note that this is only for this bridge contract. Such a vulnerability may exist on other projects on the EthereumPoW chain.”

Following Ethereum’s successful Merge event, which saw the smart contract blockchain transition from PoW to PoS, a group of miners decided to continue the PoW chain through a hard fork. 

Dogecoin becomes second largest PoW cryptocurrency

Following the Ethereum Merge, Dogecoin now only trails Bitcoin as the biggest proof-of-work cryptocurrency.

Meme-inspired cryptocurrency Dogecoin (DOGE) is now officially the second largest proof-of-work (PoW) crypto in terms of market cap, following the Ethereum network’s proof-of-stake (PoS) upgrade on Thursday. 

Bitcoin (BTC), of course, remains miles ahead of Dogecoin’s market cap of $7.83 billion, though the well-followed memecoin is still comfortably ahead of the third place PoW cryptocurrency Ethereum Classic (ETC) with a market cap of $4.69 billion, Litecoin (LTC) at $4.01 billion and Monero (XMR) at $2.65 billion.

Ranking of PoW-Based Cryptocurrencies by Market Cap. Source: CoinMarketCap

One Dogecoin fan appeared to be in disbelief of Dogecoin’s rise to become the second largest PoW cryptocurrency, stating, “who would have thought that this would happen. Congrats #Dogefam.”

But, it wasn’t taken well by everyone. One Twitter user responding to a tweet about the news asked how people could take the crypto industry seriously with a memecoin so close to the top spot, emphasizing the need to remove “useless coins” from public view.

Dogecoin may also soon find itself competing against ETHPoW (ETHW) — the Ethereum PoW hard fork chain that will continue mining, according to the official Twitter account of the ETHW, which is currently priced at $13.64, according to CoinMarketCap.

Ethereum’s transition to PoS may have added pressure on PoW-powered cryptocurrency networks to transition to a more sustainable consensus mechanism.

In a statement to Cointelegraph, Lachlan Feeney, the founder and CEO of Australian-based blockchain development agency Labrys, said “the pressure is on” Bitcoin now to justify the PoW system over the long term.

He added that “reluctance to carry out its own transition to PoS will be huge.”

Meanwhile, the Dogecoin Foundation has been considering a transition of Dogecoin to a proof-of-stake after first hinting at the shift in September 2021, which was put forward by Ethereum co-founder Vitalik Buterin, who is also an adviser for the Dogecoin Foundation.

In December 2021, the Dogecoin Foundation released its Dogecoin Trailmap, which proposed to build a Dogecoin “community staking” version that resembled PoS.

Related: Proof-of-stake vs. proof-of-work: Differences explained

“Such a version would allow all Dogecoin users to stake their DOGE and get extra tokens for supporting the network,” the Dogecoin Foundation said.

However, little progress has been made since then, as it still appears to be in “proposal” status according to the Dogecoin website.

DOGE is currently priced at $0.06 at the time of writing.

‘Green ETH’ narrative to drive investment and adoption, says pundits

Post-Merge Ethereum has now detached itself from the “crypto mining is bad for the environment” narrative, following its transition to proof-of-stake.

The shedding of Ethereum’s energy-intensive proof-of-work (PoW) system is expected to see Ether (ETH) “flow into the institutional world,” according to a number of fund managers and co-founders.

On Sept. 15, Ethereum officially transitioned to a proof-of-stake (PoS) consensus mechanism, which is expected to cut energy consumption used by the network by 99.95%, according to the Ethereum Foundation.

The upgrade effectively ended the need for the Ethereum network to rely on miners and energy-guzzling mining hardware to validate transactions and build new blocks, as these functions are now replaced by validators who “stake” their ETH.

In a statement to Cointelegraph, Charlie Karaboga, CEO and co-founder of Australian fintech company Block Earner said the network’s transition to PoS would “drive the future of money to be more internet-based.”

He said that Ethereum would become “the settlement layer that everyone will accept and trust — especially when the spotlight is shining brighter than ever on the issue of sustainability in crypto mining.”

Markus Thielen, Chief Investment Officer of digital asset manager IDEG said that he had been in discussions with sovereign wealth funds and central banks to help build their digital asset portfolios, but direct investment had often been “voted down due to energy concerns.”

But now that the Ethereum network has transitioned to PoS, this issue is much less of a concern, he said:

“While demand has been strong, the missing link has been an underlying zero-emissions, financial infrastructure. With Ethereum moving to PoS, this clearly solves this last pillar of concern.”

Henrik Andersson of Apollo Capital told Cointelegraph that ESG had become a “big factor” behind institutional investment decision making in the last few years.

Andersson said he believes the 99.95% energy consumption cut on Ethereum would dramatically improve ETH’s ESG score, which in turn would “make it more appealing for institutional investors” over the long-term.

Blockworks co-founder Jason Yanowitz told his 92,900 followers on Sept. 15 that “Green ETH” will be the “best narrative” in crypto’s history, with crypto mining and PoW long plaguing the industry.

Related: How blockchain technology is used to save the environment

Yanowitz noted that until now, the “Bitcoin is bad for the environment” narrative has been “so impactful,” adding it spread like wildfire” and “has probably had the most negative impact on the asset’s performance.”

“Most large institutions now have ESG mandates,” said Yanowitz.

“Fidelity, BlackRock, Goldman, etc… whether or not they like it, they now have to consider the environmental impacts of their portfolios.”

But that is now old news for Ethereum, with Yanowitz adding that the most important takeaway from the Merge is that “Ethereum becomes green” which becomes highly appealing to large corporations who have ESG mandates to comply with:

“This will be the best narrative crypto and ETH has ever seen. It will flow into the institutional world, where investors will buy ETH because it satisfies their ESG mandate.”

‘Green ETH’ narrative to drive investment and adoption, say pundits

Post-Merge Ethereum has now detached itself from the “crypto mining is bad for the environment” narrative, following its transition to proof-of-stake.

The shedding of Ethereum’s energy-intensive proof-of-work (PoW) system is expected to see Ether (ETH) “flow into the institutional world,” according to a number of fund managers and co-founders.

On Thursday, Ethereum officially transitioned to a proof-of-stake (PoS) consensus mechanism, which is expected to cut energy consumption used by the network by 99.95%, according to the Ethereum Foundation.

The upgrade effectively ended the need for the Ethereum network to rely on miners and energy-guzzling mining hardware to validate transactions and build new blocks, as these functions are now replaced by validators who “stake” their ETH.

In a statement to Cointelegraph, Charlie Karaboga, CEO and co-founder of Australian fintech company Block Earner, said the network’s transition to PoS would “drive the future of money to be more internet-based.”

He said that Ethereum would become “the settlement layer that everyone will accept and trust — especially when the spotlight is shining brighter than ever on the issue of sustainability in crypto mining.”

Markus Thielen, chief investment officer of digital asset manager IDEG, said that he had been in discussions with sovereign wealth funds and central banks to help build their digital asset portfolios, but direct investment had often been “voted down due to energy concerns.”

But, now that the Ethereum network has transitioned to PoS, this issue is much less of a concern, he said:

“While demand has been strong, the missing link has been an underlying zero-emissions, financial infrastructure. With Ethereum moving to PoS, this clearly solves this last pillar of concern.”

Henrik Andersson of Apollo Capital told Cointelegraph that ESG had become a “big factor” behind institutional investment decision making in the last few years.

Andersson said he believes the 99.95% energy consumption cut on Ethereum would dramatically improve ETH’s ESG score, which in turn would “make it more appealing for institutional investors” over the long-term.

Blockworks co-founder Jason Yanowitz told his 92,900 followers on Sept. 15 that “Green ETH” will be the “best narrative” in crypto’s history, with crypto mining and PoW long plaguing the industry.

Related: How blockchain technology is used to save the environment

Yanowitz noted that until now, the “Bitcoin is bad for the environment” narrative has been “so impactful,” adding it spread like wildfire” and “has probably had the most negative impact on the asset’s performance.”

“Most large institutions now have ESG mandates,” said Yanowitz:

“Fidelity, BlackRock, Goldman, etc… whether or not they like it, they now have to consider the environmental impacts of their portfolios.”

But, that is now old news for Ethereum, with Yanowitz adding that the most important takeaway from the Merge is that “Ethereum becomes green” which becomes highly appealing to large corporations who have ESG mandates to comply with:

“This will be the best narrative crypto and ETH has ever seen. It will flow into the institutional world, where investors will buy ETH because it satisfies their ESG mandate.”

Ethereum traders shorted ETH price in record numbers during the Merge — 50% crash ahead?

Ethereum traders are betting on a “sell-the-news” event on the day of the Merge as ETH exchange balance jumps.

Ethereum successfully completed its long-awaited transition to proof-of-stake via “the Merge” on Sept. 15, while traders have been increasingly shorting Ether (ETH) in anticipation of a sell-the-news event.  

Ethereum funding rate plumme

Ether’s futures funding rates across leading derivatives platforms dropped below zero—to their worst levels to date—before the Merge. The rate dropped to as low as -0.6% on BitMex. 

ETH funding rates history. Source: Coinglass

Funding rates are a percentage of the fee paid to either short or long position holders. The platform decides the fee based on the difference between the perpetual futures contract and the spot price.

Therefore, traders consider a market bullish when the funding rate is positive. Conversely, a negative funding rate hints at a bearish sentiment in the market. Let’s understand why with an example.

Currently, Ether’s funding rate average is around -0.1%. In other words, traders with a $1 million short ETH position are willing to pay those with long positions $1,000 every eight hours (based on when platforms recalculate the funding rates).

That shows traders’ conviction in a potential spot Ether price drop after the Merge.

However, a consistently negative funding rate also increases the possibility of a short squeeze. A short squeeze occurs when an asset moves higher and short traders decide to cover their position or get forced to do so via margin calls, thus adding more upside strength to the asset’s price.

ETH price technicals hints at 50% breakdown

From a technical perspective, Ether’s price risks dropping by 50% in the coming weeks due to the formation of a symmetrical triangle on its longer-timeframe chart. 

Notably, symmetrical triangles are trend continuation patterns, i.e., they typically prompt the price to continue in the direction of their previous trend after a consolidation period. So, Ether’s symmetrical triangle pattern appears bearish, particularly as it has formed after the token’s 80% decline from its November 2021 highs.

ETH/USD three-day price chart featuring ‘symmetrical triangle’ setup. Source: TradingView

Theoretically, a bearish symmetrical triangle’s downside target is calculated after subtracting the triangle’s maximum height from the breakdown point. That puts ETH’s profit target in 2022 around $850.

Capital rotation into Bitcoin

In addition to negative funding rates and the symmetrical triangle setup, Ether also faces downside risks from a renewed buying interest in Bitcoin (BTC), the leading cryptocurrency by market capitalization.

On the daily chart, ETH/BTC dropped to 0.078 BTC on Sept. 15, almost a week after topping out at 0.085 BTC. The pair’s correction came after a strong bull cycle, wherein its price rose by more than 75% in less than three months.

ETH/BTC daily price chart. Source: TradingView

“ETH’s underperformance ahead of the merge indicates that some traders attempt to front run a potential “sell-the-news” event,” noted Arcane Research in its weekly report, albeit adding:

“Whether or not the merge will turn out to be a “sell-the-news event remains to be seen.”

In another weekly report, investment management firm CoinShares reported a substantial decline in the capital of Bitcoin and Ethereum-based investment products.

Related: Analyst on $17.6K BTC price bottom: Bitcoin ‘not there yet’

However, Ether funds witnessed withdrawals worth $61.6 million in the week ending Sept. 9 compared to Bitcoin’s $13 million.

More sell-the-news cues come from a recent rise in Ethereum’s balance across all crypto exchanges. Notably, the Exchange inflow volume reached a one-month high of 22,723.289 ETH (7-day MA).

Ethereum balance on exchanges. Source: Glassnode

Traders typically increase their cryptocurrency deposits on exchanges when they want to sell their holdings. In other words, a rising ETH balance on exchanges increases downside risks.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Breaking: Historic day for crypto as Ethereum Merge to proof-of-stake occurs

The Ethereum proof-of-stake consensus mechanism will cut energy consumption by a massive 99.95% compared to the proof-of-work system.

The Ethereum Merge has officially taken place, marking the full transition of the network to proof-of-stake (PoS). 

On Sept. 15 at 06:42:42 UTC at block 15,537,393, the long-awaited Merge saw the merging of the Ethereum mainnet execution layer and the Beacon Chain’s consensus layer at the Terminal Total Difficulty of 58,750,000,000,000,000,000,000, meaning the network will no longer rely on a proof-of-work (PoW) consensus mechanism.

Ether’s (ETH) price got a slight pump following the Merge in hourly metrics, currently trading at around $1,635, according to data from TradingView.

The Ethereum Foundation said the Merge will make the Ethereum network about 99.95% more energy efficient and will set the stage for future scaling solutions, including sharding.

Ethereum co-founder Vitalik Buterin celebrated the Merge with a tweet moments after the historical transition happened:

Speaking to Cointelegraph, StarkWare president and co-founder Eli Ben-Sasson said that “the immediate importance of the Merge is the dramatic effect on energy consumption.”

Ben-Sasson said it also marks “the first step in a process that will lead to exceedingly widespread adoption of Ethereum,” stating:

“It starts a chain reaction of changes. The end result will be the very broad use of Ethereum’s computing power and the general population using blockchain-based apps in many different areas of life.”

The Merge has come on the back of several years of hard work from the Ethereum Foundation.

Businesses that issue Ethereum-based exchange-traded products (ETPs) have been busy making their own adjustments about the Merge. Bradley Duke, CEO of the European crypto ETP issuer ETC Group, explained to Cointelegraph that the company has prepared a “forked version” of its ETH-based ETP in case there’s significant support for a PoW fork after the Merge.

“If enough people get behind a fork for whatever reason, we feel the free market will decide on what should live and what should not,” Duke added.

Related: It’s on! Where to catch the Ethereum Merge live

With the Merge complete, the “Surge,” “Verge,” “Purge” and “Splurge” are the final stages left on the Ethereum technical roadmap.

The Surge will increase scalability for rollups through sharding; the Verge will achieve statelessness through Verkle trees; the Purge will eliminate historical data and technical debt; and the Splurge will involve a number of small miscellaneous upgrades.

One of the biggest transitions in the history of blockchain didn’t go without opposition. ETHW Core, a group representing proof-of-work miners, announced that it will conduct a hard fork within 24 hours after the Merge.

Renowned designer Beeple celebrated the Merge with a sci-fi illustration:


Ethereum’s Merge will affect more than just its blockchain

Ethereum’s Merge will have a vast impact on cryptocurrency, particularly on some — like decentralized application (DApp) developers — who rely on Ethereum to conduct their business.

As with many things in life, events are not siloed. When any type of event or action occurs, planned or unplanned, it causes changes and reactions to surrounding components. Think of a stone thrown into a pond creating ripples in the water while also altering the aquatic environment below the surface. This school of thought can also be applied to the Ethereum Merge. 

The Ethereum blockchain, with its native coin Ether (ETH), is a pillar of the crypto asset industry — an industry that has become increasingly mainstream with each passing year. Ether is the second most popular altcoin, with people searching Google for “Ethereum” an average of 2.1 million times a month. ETH has risen to a value of more than $100 billion in terms of market capitalization, with the Ethereum blockchain serving as a common choice for developers building decentralized applications (DApps). In a survey conducted by the Bybit crypto exchange, Ether is the second most heard-of alternative to Bitcoin (BTC), with one in six United States adults saying that they’re familiar with it (15.4%).

The Ethereum Merge, or simply the Merge, fundamentally changes the Ethereum blockchain in pursuit of greater scalability and security while requiring less energy usage. This move may cause ripple effects for the broader crypto industry.

What is the Merge?

The Merge is part of a multi-year transition for the Ethereum blockchain, sometimes referred to as Ethereum 2.0. This broader transition essentially aims to scale the Ethereum blockchain. The official starting point of the network’s transition occurred in late 2020 with the launch of the Beacon Chain, a proof-of-stake (PoS) version of Ethereum, although Ethereum’s main proof-of-work (PoW) blockchain also continued functioning.

Expected to occur on Sept. 15, the Merge basically represents an end for the PoW chain, with all future efforts and attention focused on the PoS chain. PoW vs. PoS has been a long-standing debate in the crypto and blockchain sector. Among the mix of arguments includes PoS blockchains requiring less energy than PoW networks.

What does Ethereum (and crypto more broadly) look like post-Merge?

After the Merge, Ethereum will be a PoS blockchain, with the PoW chain becoming a thing of the past. A difficulty bomb will reduce mining rewards, making mining on the chain unattractive. Discussion has arisen regarding miners resisting the change and continuing with a forked PoW version (or versions) of Ethereum, but the main Ethereum blockchain will be the PoS one without miners.

Post-Merge, Ethereum will call on validators instead of miners to run the blockchain. Validators must lock up 32 ETH to support the blockchain’s function while earning rewards for doing so. Other methods also exist for contributing to the network via staking, such as services offered by crypto exchanges.

The Merge is not the end of Ethereum’s broader transitional journey. The event marks just over the half-way point in Ethereum’s transition — 55% of the way to completion to be precise, according to Ethereum co-founder Vitalik Buterin. Sharding is the next major goal for Ethereum, which aims to improve scalability via segmenting the blockchain into parallel portions.

There are some misconceptions about the Merge

Some common misconceptions have circled around the Merge. For one, some people believed Ethereum would magically become faster and have significantly lower transaction fees. But this is not expected to occur right away.

Likewise, some have wondered whether the Merge would result in a flood of unstaked ETH hitting the market. That isn’t the case, either. In reality, staked ETH is going to remain locked until the Shanghai upgrade, which is scheduled for 2023.

Related: Buterin and Armstrong reflect on proof-of-stake shift as Ethereum Merge nears

Thirdly, some observers have suggested that price action will be easier to predict, advising the value of ETH will surge because of the upgrade or arguing it will become a “sell the news” event that results in the price dropping. This tactic plays on market psychology. If everyone is excited for an upcoming event, the related asset could climb in price until the event. Then, when the event occurs, prices may drop due to the event being anti-climactic and unable to live up to the hype and expectations.

As with many events in crypto, traders are looking to capitalize on competing predictions. One wild card, however, is the downward price action the crypto market has already suffered, which makes it more difficult to make any prediction with certainty.

Possible trading strategies for the Merge

If you’re looking to capitalize on bullish investor sentiment ahead of the Merge, there is a case to be made for holding regular ETH, which is also known as holding “spot.” If your investment funds are sizable enough, you might even consider holding the 32 ETH required to become a validator for the network, earning around 4% interest annually. That number is expected to rise to roughly 7% post-Merge.

If the price doesn’t surge quickly enough for you to win a 1,000% return this year, your assets will at least continue working for you during the market doldrums. (Just keep in mind that your 32 ETH will remain locked until the Shanghai upgrade sometime in 2023.)

As a second strategy — if you’re looking to hedge your bag of spot ETH — you might want to consider devoting a smaller portion of your portfolio to a short position using futures contracts. Depending on how well you “time the market,” that small percentage of your portfolio could be enough to compensate for any short-term losses you experience on your spot holdings. If the market goes up, conversely, you may lose the sum you bet on futures contracts. But your spot portfolio may be adequate to cover those losses — should you choose to sell.

A third alternative, considering the market’s volatility, is to “sit” in stablecoins. This is a reasonable approach if you don’t feel a great amount of confidence in the direction the market may take next. When it finally breaks out — which it will — you can attempt to capitalize on the extreme movement. If the price of ETH drops back to $880 — which it reached in June — you may want to go long. Or if it explodes to obscene heights, you may opt to go short.

Whatever you choose, keep in mind that the majority of active traders lose most of their money. Your most likely chance to succeed is to pick a price point, make your purchase, and forget about it until favorable market conditions return.

Check if your centralized exchange will make airdropped ETH accessible

Centralized exchanges differ in how they will handle the Merge. The decision that most users will probably want to keep an eye on is whether their chosen exchanges opt to give them their “airdropped” Ethereum.

Specifically, if some blockchain participants keep operating the proof-of-work chain, Ethereum holders will suddenly have two versions of their ETH tokens — one set on the proof-of-stake chain and one set on the proof-of-work. Some exchanges, such as Bybit, have said they will offer support for both chains, allowing users to sell or withdraw their tokens. Others — including Coinbase and Binance — have declined to make the same commitment. (And of course, users can also ensure they’ll be able to access their ETH by keeping it in their own self-custodial wallets.)

Keeping tokens in complicated financial protocols could also prevent the blockchain from recognizing ETH holdings. That includes lending protocols and liquidity pools. Users may want to withdraw their ETH from such protocols a couple of days prior to the Merge if they want to ensure their holdings are recognized.

Another issue to be cognizant of is downtime during the Merge. Exchanges are mostly planning to disable deposits and withdrawals of ETH and tokens on its blockchain — known as ERC-20 tokens — beginning on Sept. 14. Most plan to reenable those activities by Sept. 16, though the date could change in the event of unforeseen technical problems.

DApp users will benefit, too

The crypto and blockchain industry is a vastly interconnected space. Ethereum itself hosts almost 3,000 DApps on its blockchain as of time of publication, according to State of the DApps. One example of Ethereum’s significant impact on the overarching crypto sector can be seen when looking back at the high Ethereum fees present in 2021, which may have deterred some DApp users.

DApp users, ETH transactors and more could be affected by the Merge, but more so as part of the grander scheme of the Ethereum 2.0 movement. The Merge in and of itself is part of the broader Ethereum transition, which ultimately looks to increase security and scalability with lessened energy usage. The Merge should have a significant impact on the energy required to run the Ethereum blockchain while operating slightly quicker, but other benefits may take more time as part of the broader transition it seems.

ETH does not have a maximum coin supply, although it has a cap on new ETH created per year. Ethereum Improvement Proposal 1559 put in place an ETH burning mechanism based on transactions, although the Ethereum blockchain also produces new ETH. The Merge will decrease the amount of new ETH created annually, potentially affecting the asset’s price activity in the market.

Bill Xing is the head of financial products at Bybit, leading the effort of researching & designing innovative instruments in both CeFi and DeFi world.

The opinions expressed are the author’s alone and do not necessarily reflect the views of Cointelegraph. This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice.

ETHW Core to push on with Ethereum PoW fork 24 hours after Merge

ETHW Core plans to split off from the main ETH blockchain and maintain a PoW version to keep ETH mining alive beyond The Merge.

The long-awaited Ethereum Merge is just around the corner, but not everyone is excited about the major upgrade. A group calling themselves ETHW Core has voiced its opposition to the change and is set to conduct a hard fork within 24 hours after the Merge. 

Under the project name, ETHPoW and with the token ETHW, ETHW Core plans to split off from the main ETH blockchain and maintain a PoW version to keep ETH mining alive beyond the Merge.

“ETHW mainnet will happen within 24 hours after the Merge. The exact time will be announced 1 hour before launch with a countdown timer and everything including final code, binaries, config files, nodes info, RPC, explorer, etc. will be made public when the time’s up,” the group wrote in a Tuesday tweet.

The Merge will shift the Ethereum network away from its current proof-of-work (PoW) mining model to a proof-of-stake (PoS) consensus mechanism, phasing out miners and replacing them with validators.

In their Aug. 29 open letter explaining their motivations, the group outlined why in their opinion, “PoS is indeed a game changer, but only in bad ways:”

“It is only prudent to continue a PoW Ethereum, which should be a no-brainer for those who champion openness and the free market as there is no downside. After all, if PoS Ethereum is really so great, why be afraid of competition?”

However many in the community believe the fork is motivated by money, rather than ideological differences.

And serious concerns have been voiced over the forks ChainID and whether it will increase the risk of replay attacks and other hacks.

Former Ethereum foundation member Hudson Jameson wondered on Sept. 8 why it was launching after the actual Merge.

“I have huge doubts they will gain much hash power if they launch post-Merge,” he wrote. “Hash power will be on other chains by then and the value prop of ETHPoW is tenuous already,” he wrote.

Coinbase Cloud protocol specialist Viktor Bunin reportedly contacted the ETHW Core for clarification on the issue. The result of the query was not posted.

Related: Ethereum ready for The Merge as last shadow fork completes successfully

If all goes to plan, the Ethereum Merge is currently less than a day away.

At the time of writing, the ETHPoW token is trading at $29.71 but only exists as a futures ticker, conceived in anticipation of the upcoming fork. The price of Ether (ETH) currently sits at $1,599, down 2.26% over the past seven days.

3 ways scammers will try to fool you over Ethereum’s Merge

Besides fake ETH 2.0 tokens and malicious token airdrops, crypto users should also be on the lookout for staking pools offering attractive staking yields.

Scammers are likely to use excitement around the Ethereum Merge to launch new scams aimed at newbie crypto users, PolySwam CEO and co-founder Steve Bassi has warned. 

The Ethereum Merge is expected to take place within the next 24 hours.

Speaking to Cointelegraph, Bassi said these scams could come in the form of fake ETH 2.0 tokens, fraudulent mining pools and fake airdrops.

PolySwam is a decentralized cybersecurity marketplace that connects cybersecurity experts to projects and companies through the use of bounties.

Fraudulent staking pools

The Ethereum upgrade marks the transition from the current proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS).

Bassi said that for many Ether (ETH) holders, joining a staking pool will be their only way of reaping yield from staking rewards if they don’t have the 32 ETH required to become an independent validator.

“Staking is a pretty new concept for most of the crypto community and unless you’ve got 32 ETH lying around you’re going to have to join one of the staking pools to make a yield off your ETH.”

Bassi, however, warned that pooled staking providers “carry their own risk” as it often requires users to deposit and give up control of their ETH.

Bassi said that upstart staking providers, which “may offer very attractive terms” could perform “sudden rug pulls” that would affect those participating in the pool:

“This risk exists today with DeFi platforms/pools and tokens, but the Merge will give scammers a new character universe to work with.”

Upgrade scam

One of the more imminent threats involves scammers attempting to trick users into signing fraudulent transactions or parting with their private keys under the guise of migrating to the new Ethereum chain.

Bassi reiterated that the upgrade to proof-of-stake should be transparent, and a user should not need to do anything to migrate or preserve their ETH-based tokens, noting:

“We’ll likely see scammers try to get users to sign fraudulent transactions and/or leak private keys based on some false pretense that the user needs to do something to migrate chains.”

Fake airdrops

Another likely attack vector will come in the form of “fake airdrops,” added Bassi — convincing users to sign transaction messages or visit phishing sites in order to receive a bogus airdrop:

“The ETH Merge will be a good excuse for these scammers to masquerade as well-known, economically valuable, projects promising airdrops.”

“Those airdrops will likely redirect users to a phishing site where they may be fleeced out of their ETH, private keys, and/or crafted transaction signing attempts.”

The Ethereum Foundation has called the upcoming Merge the “most significant upgrade in the history of Ethereum” and has urged users to be on “high alert” for scams trying to take advantage of users during the transition. It has repeatedly warned there is no such thing as an ETH2 or ETH 2.0 coin.

Related: Vitalik Buterin impersonators ramp up ETH phishing ahead of The Merge

The upgrade is expected by most onlookers to be a success, given the experience in the previous testnets. However, Bassi said there could still be a chance that scammers or hackers have found a way to game the system:

“We don’t really know if a group of scammers/hackers out there has already developed an attack or DDoS technique against the chain which can be used post-Merge when ETH 2.0 has the full economic value of ETH 1.0 moved over.”

“If there were such an attack it’s likely to only temporarily affect the chain and, possibly, the market as there a lot of smart eyes watching behavior post-Merge. However, an attacker will likely be looking for the opportunity to monetize any discoveries.”