The listing of ETHPOW (ETHW) on several crypto exchanges had some initial success, but resulted in a significant price drop.
ETPOW is reduced by 80%
On the daily chart, the price of ETHW dropped more than 80% to $25 on September 10, a month after the market started.
For starters, ETHPOW only exists as a futures token, for now, considering that an upcoming network update on Ethereum could cause a chain split.
Ethereum will undergo a major protocol change called the Merger in mid-September, changing the current consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS).
So, Ethereum does The mining army is obsolete, replaced by “verifiers”, nodes that perform the same functions only by stacking a certain amount of tokens with the network.
As a result, existing Ethereum miners will be forced to migrate to other PoW chains or shut down. Ethereum Classic (ETC), which contains the original Ethereum POW code, has benefited even more as a haven for such miners.
For example, the chart below shows Ethereum Classic’s hashrate increasing and Ethereum’s hashrate decreasing in the days leading up to the merger.
But Ethereum Classic may not be the only option for ETH miners.
Chandler Guo, one of the most famous crypto miners, has proposed that Miners continue to approve and block blocks on the current PoW Ethereum chain post-merger. This controversial so-called hard fork will keep the current Ethereum Pow chain alive, which Guo and supporters call ETHPOW.
And just as the Ethereum blockchain has its native coin in Ether (ETH), the new ETHPO chain will have an asset called ETHW. Anyone holding ETH before the merger will receive an equal amount of ETHW after the possible chain split.
Related: Ethereum merger could create high volatility, warns BitMEX CEO
But given ETHPOW’s high downside risk, traders seem comfortable holding ETH.
History suggests $ETH PoW forks sell better. ETHW IOUs are now $30-33 (-67% from 1 month ago). I won’t sell the forks — if it doesn’t happen — and you $ETH Closed in the contract.
So if you’re quick, think of this as a free 1.7% stake on you $ETH. https://t.co/RRCc7kmV24
— Mira Cristanto (@asiahodl) September 9, 2022
Furthermore, the drop in ETHW price may indicate to traders that the probability of Ethereum chain split is decreasing.
The Paradigm report has caused another blow to ETHW.
In a report published on September 1, the crypto investment firm Paradigm argues that the price of one ETHW token should not exceed $18 after its launch. This is 90% below the token’s high of $198 established on August 9.
The firm cited the backlog, with futures trading below the spot price, as the reason behind its $18-price target for ETPOW on Ethereum’s September 30 futures contract.
The report highlights that some exchanges, including FTX and Deribit, measure the size of their ETH futures/perpetual contracts by referring to the Ethereum POS version.
And since ETH futures are now trading at a discount of $18 compared to spot prices, the ETHPOW token could be worth at least $18 in a potential fork.
“Since Spot = POS + POW, we can estimate the market value of ETH PoW by looking only at the future spot,” the report explained.
“Currently, the base ETH PoW price is ~$18, which is ~1.5% of the market value of ETH.”
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