ETHW

What is PoW Ethereum (ETHW), and how does it work?

PoW Ethereum or ETHW is a forked version of the Ethereum blockchain created by a Chinese miner after the Merge of the execution and consensus layers.

Ethereum blockchain shifted from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism on Sept. 15, 2022. Along with this move, ETHPoW, a distinct PoW blockchain (basically the old pre-Merge Ethereum) forked from Ethereum’s Merge, became live. This forked version of Ethereum aims to maintain the proof-of-work mining process for ETH miners.

Any miner is permitted to add a block to the PoW network with the clear stipulation that the first valid block published is the correct one. In reality, more than one legitimate block is occasionally discovered by the network due to the latency of data propagation, creating numerous branches of the blockchain called a fork. 

This article will discuss the proof-of-work Ethereum fork, the history of PoW Ethereum and the differences between ETH and ETHW. 

What is ETHPoW (ETHW)?

The long-awaited “The Merge” upgrade for Ethereum reduced the requirement for miners. It replaced them with validators who stake Ether (ETH) rather than using costly and energy-intensive devices to secure the network, significantly increasing the cryptocurrency’s energy efficiency. However, ahead of the Merge, a hard fork of the Ethereum network, called ETHW, which still uses the PoW consensus mechanism, was created, leading to a triumph for ETH miners. 

But who is behind ETHW? Chinese miner Chandler Guo opposed the PoS consensus method and launched the PoW-based Ethereum blockchain. Although creating the PoW Ethereum chain could be a victory for miners over stakers, ETHW users suffered accessibility issues. 

The chain ID that ETHPoW used is 10001, but it was already in use by a Bitcoin Cash testnet. As a result, the MetaMask cryptocurrency wallet users faced issues as the Chain ID, acting as an identifier, could not differentiate between two separate blockchains.

Chain IDs can be chosen at will because there is no central repository or registry, but pre-hard fork testing would have found the contradiction, whereas the team behind ETHW ignored the issue. Despite this, crypto exchanges like Binance and Coinbase showed support for ETHW. For instance, Binance announced its ETHW mining pool, stating that it will be subject to the same review process as other cryptocurrencies.

Related: What is a cryptocurrency mining pool?

How does PoW Ethereum (ETHW) work?

The initial version of the Ethereum network (i.e., Ethereum Classic) was based on the PoW consensus method. However, this version was hard forked to secure the network due to the DAO hack. EthereumFair and EthereumPOW are the other two hard forks of the original Ethereum blockchain that will continue to use proof-of-work mining.

Proof-of-work cryptocurrencies like Bitcoin (BTC) are promoted as a censorship-resistant, trustless type of digital money created after one person or a small group of people solve a mathematical puzzle and propose a new block. However, to prevent any small group of miners from enacting rules that would weaken the resistance to censorship, many non-colluding miners must be processing transactions.

Similarly, to stop anyone from abusing the system, ETHW miners will also continue to solve arbitrary mathematical challenges to validate transactions and mine new tokens. In return, they will be rewarded with ETHW, the native asset to the ETHPoW chain.

How to buy PoW Ethereum (ETHW)

Crypto trading platforms like Crypto.com and exchanges such as Coinbase and Binance are examples of a few places where ETHW supporters can buy proof-of-work Ethereum tokens.

For instance, Binance formally launched Binance Pool’s fee-free Ethereum ETHW mining service that offers ETHW withdrawals for a limited time. However, please note that ETHW deposits are not possible. On Binance Convert, users can sell ETHW against BUSD and USDT.

The basic steps required to buy ETHW on your chosen platform include:

  • Create an account on your selected platform/exchange and verify your identity.
  • After the identity verification process is successful, deposit funds.
  • Users can go to the trading section and buy ETHW after their account has been funded.

But why do people use PoW Ethereum? Proof-of-stake critics prefer proof-of-work because they have already invested in expensive mining equipment, and the shift to a PoS network will leave them with no revenue. 

How to store PoW Ethereum (ETHW)?

Hardware or software wallets can be utilized to store ETHW. Hardware wallets offer more security than software wallets as the funds are stored offline using wallets like Ledger Nano S. Crypto owners with software wallets retain custody of their private keys as opposed to allowing them to be held by the exchange.

Related: Ethereum wallets: A beginner’s guide to storing ETH

Users who are mostly away from their PCs may choose mobile wallets to store ETHW or any other cryptocurrency. However, the original owner may lose funds if the device is infected with malware. Alternatively, one can use paper wallets that store private and public keys and QR codes on a piece of paper. Again, if the document containing this information is lost or falls into the hands of unauthorized users, the owner’s ETHW cannot be recovered. 

ETH vs. ETHW

After the Merge, the Ethereum network was split into two versions: ETH, which uses the PoS consensus algorithm, and ETHW, which uses the older PoW algorithm. That said, ETHW miners receive rewards in the form of Ethereum tokens by solving complicated mathematical puzzles, whereas validators will need to stake ETH for revenue purposes.

ETHW attracts miners because without a proof-of-work consensus mechanism, they may go bankrupt as new tokens will be added to the blockchain via the staking process. On the other hand, the proof-of-stake blockchain is not a replacement for the original Ethereum blockchain but rather a merge of the execution (mainnet) and consensus (Beacon chain) layers.

The differences between ETH and ETHW are stated in the table below:

ETH vs. ETHW

Future of PoW Ethereum

The PoW consensus scheme’s incentive structure requires the network’s miners to perform many hashes to obtain the first usable block hash, resulting in unsustainable energy use. Additionally, the consensus mechanism adjusts the block hash difficulty upward as the network’s processing power grows, leading to a higher network-wide hash rate.

Moreover, the energy used by unsuccessful miners goes to waste, leading Ethereum to move to a proof-of-stake consensus mechanism. Although ETHW attracts miners because they have already invested in hardware mining equipment, the PoS consensus method is less energy-intensive and allows networks to scale inexpensively. 

Proof-of-stake is still in its infancy, potentially revolutionizing blockchain security and rendering mining obsolete. But it is yet to be seen if PoS consensus algorithms will result in the complete cessation of PoW mining.

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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. 

3 reasons why Ethereum PoW hard fork tokens won’t gain traction

A lack of oracle support, the majority of DApps being supportive of the Merge and Ethereum Classic’s minimal developer activity suggests that PoW hard forks will fizzle.

Ether (ETH) is the second largest crypto by market capitalization and the absolute leader in decentralized applications by deposits. Becoming a victim of its own success, the network experienced a fee hike in November 2021 when the average transaction costs surpassed $50. 

That’s precisely why the Merge is a critical step to implementing a fully functional scaling solution. The confirmation of a transition to a proof-ofstake (PoS) consensus was the main driver for the rally toward $2,000 on Aug. 15.

Investors were partially excited about the reduced issuing schedule and likely a transition to a deflationary scenario, but there’s also the expectation of upcoming forks. As a result, hard-forked coins may be awarded to Ether holders on different blockchains, even though there’s no guarantee those will find traction or sufficient liquidity.

From one side, there’s the temptation of free money and even bonus non-fungible tokens (NFTs) as the forked chain will initiate with the same state of the original Ethereum network, meaning each address will hold the exact same contents in terms of tokens and transaction history.

On the other hand, there’s also a sense of disappointment after Ether’s agonizing 29% correction that took place after the $2,000 resistance proved to be more challenging than expected. It’s possible that as investors realized that the practical utility of the forks would be much lower than anticipated, the exuberant expectation of free money dissipated, and reality kicked in.

ETHPoW, for now, is a possible new chain backed by proof-of-work (PoW) miners. Some exchanges have initiated futures trading for the fork chain native asset, ETHW. Markets seem to have given their opinion, as the contract is now trading below $55 at Poloniex and Gate.io.

There’s no backing and oracle support for forked stablecoins

The two leading stablecoins, namely USD Coin (USDC) and Tether (USDT), have officially confirmed intentions to exclusively support the Ethereum Foundation-backed Merge chain. Cointelegraph previously reported that given that the two stablecoins dominate, the issuers’ support “should result in a smooth transition for Ethereum.”

Meanwhile, the core team behind EthereumPoW (ETHW) said they would temporarily freeze tokens in certain liquidity pools of DeFi applications to protect user assets after the hard fork.

The idea of freezing users’ assets without their consent didn’t go well with many. Some users called the Twitter account behind EthereumPoW a scam because the community has voted on no such change.

DApps go beyond merely facilitating transactions because, as they interact with external data, request off-chain computing and this is where blockchain oracle technology comes into play.

Chainlink enhances smart contracts by linking them with real-world data, events and transactions. In an official announcement on Aug. 8, the protocol revealed that its services would remain on the Ethereum PoS blockchain which is supported by the Ethereum Foundation.

Related: MakerDAO co-founder recommends DAI-USD depegging to limit the attack surface

Leading DApps will incentivize users to ditch forked tokens

On Aug. 16, Aave (AAVE) holders were asked to take part in voting to” commit” to Ethereum’s PoS consensus, giving power to an authority to shut down any Aave deployments on any alternative Ethereum forks.

Despite being designed exclusively as an Ethereum application, Aave has become interchain over the years and currently has its official versions running on Avalanche, Arbitrum, Optimism, Polygon, Fantom and Harmony.

Investors are starting to realize that the DApps and stablecoins will not support forked chains, meaning the “free” tokens and NFTs are less likely to be accepted in marketplaces and leading DeFi applications. Regardless of the ETHPoW token value, the utility of the PoS network supported by the Ethereum Foundation far exceeds the utility of competing chains.

Ethereum Classic never gained traction

Ethereum Classic (ETC) is a pre-existing example that supports the thesis that a competing chain will not undermine Ether’s (ETH) price. The original hard fork followed a 2016 consensus change and aimed to reverse a $60 million exploit. The DApps on this competing proof-of-work (PoW) chain never gained traction despite its $4.5 billion market capitalization.

Current data suggests that Ether traders should disregard the upcoming forks and focus on the roadmap toward scalability and whether or not the network maintains its position as the leader by total value locked.

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

What the fork? Ethereum’s potential forked ETHW token is trading under $100

A non-difficulty bomb ETHW chain could grab 2%–10% of Ethereum’s market capitalization, crypto hedge fund manager says.

An Ethereum fork token that does not yet exist, dubbed ETHW, is trading under $100 across several crypto exchanges after debuting at $30. 

ETHW and ETHS begin trading 

ETHW is the native asset to the ETHPoW chain. ETHPoW, for now, is a possible new chain backed by proof-of-work (PoW) miners as the original chain switches to a proof-of-stake (PoS) consensus in September’s “Merge” event.

Meanwhile, the proof-of-stake version ETHS is trading at around $1,600 or the difference between the ETH price and the ETHW price. 

As a result of this potential chain split, anyone holding a certain number of the original chain’s Ether (ETH) will automatically receive an equal amount of ETHW tokens. Such speculations have prompted some exchanges to list ETHW for trading in advance.

For instance, Poloniex announced support for both ETHW, as well as ETHS, the PoS chain token, listed for trading against Ether.

Crypto exchange MEXC Global and Gate.io have also listed ETHW and ETHS on its platform. Concurrently, OKX CEO Jay Hao has committed that they would list the newly forked Ethereum coins if there is “sufficient demand” for them among traders.

Crypto derivatives exchange BitMEX also launched Tether-margined contracts for ETHW, creating more room for price speculation ahead of the token’s potential inception post Merge.

ETHW trading at how much?

ETHW debuted on Poloniex and MEXC Global on Aug. 8 at around $30 per token. On the same day, it rallied 333% to $130 before correcting to approximately $100 on Aug. 9. Trading volume was stable throughout the period.

ETHW/USD hourly price chart. Source: MEXC Global

Will ETHPoW survive?

Forked chains seldom survive, mainly due to a lack of support from app developers, miners and promoters. Nonetheless, some projects have witnessed reasonable adoption by users and miners alike (e.g. Bitcoin Cash, Ethereum Classic).

Notably, Hongcai “Chandler” Guo, a San Francisco-based angel investor in Bitcoin and Ethereum startups, has emerged as the main backer of ETHPoW. He claims he has a team of 60 developers working on getting rid of the so-called “difficulty bomb,” a software tool designed to force the PoW-to-PoS transition.

Related: F2Pool co-founder responds to allegations it’s cheating the Ethereum POW system

On the other hand, Ethereum co-founder Vitalik Buterin called fork supporters “a couple of outsiders” that own crypto exchanges and “want to make a quick buck.”

He reasserted that Ethereum miners already have a PoW alternative in Ethereum Classic, the original version of Ethereum, noting that it has “a superior community and superior product for people pro-proof-of-work.” 

Ethereum Classic (ETC) has rallied nearly 150% since the Merge’s announcement on July 14.

ETC/USD daily price chart. Source: TradingView

Meanwhile, a non-difficulty bomb version of ETHW could grab 2%–10% of Ethereum’s market capitalization, said Kevin Zhou, the co-founder of Galois Capital, a crypto hedge fund.

He explains that Ethereum could split into at least three chains after the Merge: ETHW (without the difficulty bomb), ETHW (with the difficulty bomb) and ETHS.

Zhou warned about potential liquidations in the Ethereum forked token markets but admitted that the tokens could survive at lower prices.

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.