The Ethereum blockchain network is all set to undergo the much-awaited Merge upgrade next month in September. However, Ethereum detractors have been willing to continue with a Proof-of-Work (PoW) version of the blockchain as ETHW.
The world’s largest asset manager Grayscale believes that there is a good enough reason for the ETHW version to NOT succeed. Grayscale draws a comparison with the 2016 Ethereum hardfork that led to the creation of the Ethereum Classic (ETC).
However, there’s a huge difference between the Ethereum network of 2016 and the Ethereum network of today. Over the last six years, Ethereum has developed a robust ecosystem of users, decentralized applications (dApps), smart contracts, decentralized finance (DeFi) and much more. In its detailed report, Grayscale explains:
A PoW fork of the current Ethereum network will bring duplicate instances of all of these tokens, which could present meaningful challenges to developers and market participants.
In fact, the sheer complexity of DeFi and the number of asset-backed tokens locked in DeFi protocols poses a catastrophic risk to the price of ETHW due to on-chain positions attempting to be liquidated.
