Original author:0x76

Original author:

As the Ethereum PoS upgrade date is approaching, more than one team in the community has publicly declared that it will hard fork Ethereum when The Merge occurs, in order to retain the traditional PoW mining mechanism of Ethereum. (Hereafter, the forked PoW chain Token is collectively referred to as PoW-Token)

So, what impact will this fork have on the Ethereum ecology after the fork, and how should ordinary Ethereum users protect their assets during this fork, and even strive for arbitrage opportunities?

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How to view this Ethereum hard fork

First of all, we express our basic point of view. We don't think this fork can bring too many meaningful contributions to the Ethereum ecosystem. And in view of the previous experience of the leader of this fork and the adequacy of his technical preparations, this fork may not even be truly successful.

But even so, I still recommend that everyone maintain a certain degree of attention to this hard fork. First, most Crypto users hold some Ethereum assets more or less. Therefore, if the hard fork is really successful, how to deal with the PoW-Token obtained for free after the fork is also a topic with certain practical guiding significance.

Therefore, the purpose of writing this article is naturally not to promote the farce of this fork, but to better summarize and analyze the phenomenon of "simultaneous forking of ecological projects and public chains" that may actually appear for the first time.

What changes will happen to the assets on the PoW chain after the fork?

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1. Cross-chain assetsThe cross-chain assets here refer to the generalized cross-chains that occur through the "lock-in casting" model, including cross-chains in the general sense completed through cross-chain bridges, as well as generalized cross-chains such as recharging to trading platforms and centralized stablecoin issuance . For the basic logic of generalized cross-chain, readers can refer to "When you are cross-chain, are assets really transferred?

"Related discussion in.

(1) Assets that entered Ethereum before the fork: return to zero directly

Since the assets that cross into Ethereum are essentially locked-in casting models, the redeemable certificates of the original assets issued in Ethereum. Therefore, the value of these certificates depends solely on whether they can also be used to redeem the original property locked in the vault.

Therefore, after the fork of Ethereum, the redeemable certificates issued in Ethereum corresponding to this type of asset vault will fork into two identical versions, and the manager of the vault must actively choose which fork to recognize version is true and which one is false. The value of the unsupported certificate version will be directly reset to zero from the first moment of the fork.

And this type of cross-entry assets has a very high market value in Ethereum, including but not limited to centralized stablecoins USDT, USDC, and WBTC, renBTC, etc. cross-chain bridges. Not surprisingly, the issuers of these cross-chain assets will choose to support the PoS version of Ethereum after the fork, so the PoW fork version of these assets will directly return to zero after the fork.

(2) Assets that left Ethereum before the fork: most of them are expected to be permanently locked in the contract

For the ETH that crossed from Ethereum to other chains before the fork, because the so-called "cross-out" actually just locked the ETH in the Ethereum contract of the cross-chain bridge, and did not really leave Ethereum, so these ETH also It will become the same amount of PoW-ETH after the fork.

But if you want to unlock these PoW-ETH again, you need to cross the WETH back again. At this time, the ETH locked in the PoS chain will definitely be unlocked smoothly due to official support. However, for the PoW-ETH locked in the PoW chain, due to various reasons such as the front-end no longer adapting and the team no longer supporting it, many users must give up the application directly due to the increased difficulty of operation. In the end, many PoW-ETHs were permanently locked in various contracts and became dormant assets.

The logic is similar to that of stETH. Assuming that Lido received the user's ETH at that time and crossed it into the Beacon Chain and adopted the same locking and casting logic, then the equivalent amount of PoW-ETH corresponding to these stETHs will also be locked in the Lido contract. If it cannot be withdrawn smoothly, it will also become a locked asset and directly cause the PoW version of stETH to be reset to zero. (The analysis in this part is based on some guesses, please correct me if there are any mistakes)

(3) Assets in the trading platform: depends on the attitude of the trading platform

As for whether these assets are directly owned by the platform or returned to users in proportion, it is necessary to look at the specific policies of each platform.

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2. Lending agreement

The lending agreement on the PoW chain after the fork is expected to be the DeFi infrastructure that suffers the most chaos.

Because basically all lending agreements involve a liquidation mechanism, and accurate liquidation must rely on the accurate quotation of the oracle machine. Therefore, whether lending protocols such as MakerDAO, Aave, and Compound can continue to operate will mainly depend on whether the oracles they use can continue to operate on the forked PoW chain.

At present, mainstream lending agreements basically use Chainlink or Uniswap as the main source of quotation information. Among them, Uniswap is less dependent on the outside world, and it can be assumed that it can continue to operate according to the preset logic. However, if Chainlink wants to support the forked PoW chain, it must be actively adapted by the official team.According to the current Chainlink, it will not support any PoW fork version of Ethereum. Therefore, it can be said that this decision has basically imposed a death sentence on the post-fork lending agreement. If the official teams of these lending agreements are not interested in replacing the oracles of the PoW forked version of the agreement, then the various assets locked in it may not be taken out.

3.AMM

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Compared with the lending agreement, the decentralized trading platform adopting the AMM model is a DeFi agreement that is truly self-consistent and can operate normally without inputting information from an external machine.

It is expected that the forked Uniswap and Curve will both operate normally, and due to the authorization restrictions of the Uniswap V3 version, the forked PoW version of Ethereum may be the only public chain that deploys V3 contracts besides the orthodox Ethereum.

Of course, if the fork is unsuccessful in the end, or PoW-ETH is worthless, it doesn't matter.

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4. Small picture NFT

To be honest, for the vast majority of small picture NFT projects, there is really no substantial difference in form between the forked NFT version and the PoS orthodox version. After all, for this type of NFT project, what is really reflected on the chain is just a coin issuance contract that saves the link of the image address.

Therefore, an important prerequisite for realizing the above logic is that at least there must be an interactive interface for ordinary users to interact with.

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5. What about the front end?

So, who does these important jobs? There is a high probability that the official teams of these mainstream projects are not interested, but there are certain risks if you expect Master Bao to get these things done. There is still about a month before the expected fork date, and I hope someone has reminded him that there is still such an important work to be done.

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According to the above analysis, if ordinary users want to maximize their own interests, they can theoretically adopt the following strategies. (Risk warning: It is estimated that the risk and difficulty of the operation are quite large, and it is not recommended for novice users to interact blindly. In addition, this is only a theoretical analysis, which may be quite different from the real complex situation.)

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Before the fork

• The main goal of this stage of action is to prevent ETH from being locked in the contract after the fork.

• WETH crossed from the Ethereum main network back to the main network;

• Coins that will return to zero after the fork can be pledged to lend ETH first: this strategy may face relatively high interest rates before the fork, so it needs to be chosen carefully;

• Withdraw the position of "ETH-Zerocoin after fork" in the AMM pool to avoid impermanent losses;

• ......

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After the fork

• Taking advantage of the price of many USDT AMM pools after the fork, sell these tokens and exchange them for PoW-ETH at the first time: This strategy has a high threshold for ordinary users, and may also encounter gas war and MEV arbitrage, etc. wait. If the fork does happen, a big battle is expected in the first few blocks after the fork.

• The intrinsic value of most of the forked ecological tokens will depreciate or even return to zero due to the failure of the normal operation of the agreement, and there is a chance to remember to sell them in time;

• ......

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Pay attention to asset safety

To be honest, if this fork is really successful, what will happen on the fork chain afterwards is completely beyond the predictable range of personal rationality. Therefore, for ordinary users, the risk cannot be overemphasized.

So while you are busy picking up bargains, don't let people steal your home.

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Can the PoW chain after the fork achieve long-term development value?

After reading the above, you will understand that although nominally this fork will inherit all the status and projects of Ethereum before the fork. However, due to various problems, what the PoW version of the forked chain can inherit in the end will be a fragmented Ethereum ecology.

So the actual significance of such an ecological fork is a question worthy of doubt.

In addition, for an ecological public chain, the core concept of its operation will also greatly affect the subsequent development of the ecology. So what advanced concepts do the teams leading this fork have?

Here are some excerpts from their promotional text:

"In 2021, the first exposed bones:

In order to reduce the total supply of ether in circulation, the Ethereum team ignored the miners who have favored it and released the EIP-1559 protocol. The miners, the original supporters of Ethereum, under the exploitation and blackmail of the new protocol, most of the packaging revenue Burned on the chain. The interests of thousands of miners have been greatly lost.

In 2022, become a dragon:

The former dragon-slaying boy raised his knife again, forcing the miners who have favored him to accept The Merge consensus, abandoning Pow and embracing the Pos fork. Not only to exploit the miners, mining pools and miners who have nourished him What’s more, it needs to be cramped. The hundreds of millions of investment of the miners will be wiped out, which makes those who see it horrified.”

To be honest, this statement, not to mention that it can be compared with Vitalik's understanding of the blockchain, even if it is measured on the most basic value scale of modern society, is fundamentally unqualified.

After all, in modern society, no matter how huge the differences in the division of labor among different market subjects are, they are all equal in terms of personality status. In an open and fair market, people reach transactions according to the rules, perform their obligations according to the contract and get rewards.

However, in the declaration above, the project party directly simplifies the cooperation between miners and Ethereum to the relationship between the grace of nurturing and rewards, and it feels like directly shouting the slogan of "Monarch, minister, minister, father, father, son". This kind of thinking not only does not conform to the spirit of blockchain at all, it can even be said that it does not even have the basic spirit of market economy.

The above statement with a very strong "Chinese flavor" reminds people of the unspoken rules of not investing in Chinese projects in the circle. But in fact, the real conflict between the two is not even the difference between Chinese and Western cultures, but the fundamental difference between pre-modernity and post-modernity.

Of course, a more likely explanation is that this narrative method is likely to be a way for them to accurately screen target users intentionally or unintentionally. After all, groups that believe in certain specific narratives have been repeatedly proven to be the best batch of leeks in the circle.

Finally, let’s end this article with a passage that has been widely circulated in the past two days: