Adhering to the Logic of PoW: Analysis of the Legitimacy and Feasibility of Ethereum's Merge Hard Fork

Author: ThePrimedia researcher Spike

Editor: ThePrimedia founder Jerry

The original intention of decentralization should not be ridiculed, especially since it concerns the soul of the Web3 world, determining the future of the crypto ecosystem.
Instead of calculating the gains and losses after the transition to PoS, it is better to think carefully about what has happened------why is there applause for the trend towards centralization?

The urgency and importance of re-emphasizing the concept of decentralization have been increasingly evident. After Aave and Circle responded to the U.S. Treasury's sanctions against Tornado Cash, the result was that hundreds of celebrity addresses were "collaterally damaged" by Aave, USDT's circulation surpassed USDC within a week, and MakerDAO re-evaluated the collateral composition of DAI… The adverse effects of stablecoin centralization have already served as a warning to everyone, when all this happens on Ethereum, it will completely backfire against the first principles of decentralization.

If we do not stop it, then after more than a decade since Bitcoin's inception, the impossible triangle of the blockchain world will be resolved------at the cost of abandoning decentralization, it will completely degenerate into a mundane financial game indistinguishable from Wall Street. The imagination that Satoshi Nakamoto opened "a window and let in a beam of light" for the world will also vanish.

Fortunately, there are still those in the crypto market who insist on decentralization: BitCoke and its invested mining farms publicly support hard forks and token trading, believing that these defenders uphold the spirit of Satoshi Nakamoto's blockchain; BitMEX has launched ETHPOWZ22 derivatives; EthereumFair is preparing to defend the ideals of PoW with technology and build a complete financial ecosystem for ETHPOW… This is also a preparatory move to defend our original dream; if we abandon our beliefs without a fight this time, then the dragon slayers will turn into dragons in their meticulous calculations.

Ethereum is facing the most significant split in history, which is not merely a dying struggle by miners to protect their own interests. At the critical moment of Ethereum's Merge hard fork, ThePrimedia interviewed and researched the strategic supporters of the hard fork, including BitCoke, the EthereumFair community, and various forces within the Ethereum ecosystem, attempting to analyze the logic behind the Ethereum Merge hard fork.

Part One: Legitimacy of the Resistors

Ethereum's transition to a PoS mechanism means abandoning the adherence to Satoshi Nakamoto's principles, which is the "mission" of the defenders' hard fork. The Ethereum Merge hard fork can be summarized as energy saving + scalability VS security + decentralization. This is essentially a dispute over the developmental trajectory of blockchain, rather than a fork conflict driven by miners' self-interests. The PoS mechanism will directly lead to the exit of network-maintaining miners, which superficially seems to lighten the historical burden, but handing over to new staking nodes will inevitably promote network centralization.

Currently, Ethereum's TVL accounts for 60% of the public chain track------the three-win situation of miners, users, and Ethereum under the PoW model has achieved the prosperity of the decentralized crypto ecosystem today and left more room for expectations. A thousand people agreeing is not as good as one person speaking frankly, just like the consensus of the EthereumFair technical community------the PoW mechanism is the best way to safeguard the original intention of blockchain decentralization; if we let go now, decentralization will become an unattainable castle in the air.

Ethereum has grown on the shoulders of Bitcoin; do not forget the fundamental elements of Ethereum's success------PoW + smart contracts together constitute the ecological prosperity of Ethereum:

• - PoW is the mining mechanism, where miners compete for bookkeeping rights through hash collisions, ordering transactions. PoW guarantees that everyone can participate fairly in Ethereum.

• - Smart contracts are the foundation for complex operations such as DeFi, NFT, and GameFi, realizing for the first time the coexistence of multiple on-chain assets in a public chain ecosystem.

The PoW model created by Satoshi Nakamoto is not an immutable law. An extremist approach to technology will only bind our hands and feet, but the development of Bitcoin since its mainnet launch is the best annotation of PoW, which can be understood as "Satoshi Nakamoto's principles" having withstood the test of history. In the blockchain world, decentralization, security, and scalability are the eternal impossible triangle; Ethereum's merge is merely evading this issue rather than seeking a fundamental solution. After abandoning PoW, the objectivity of transaction confirmation will disappear, and the physical connection between Ethereum and the real world will also vanish.

The logic of adhering to PoW is clear: under Bitcoin's PoW model, the principle of the longest chain is the final confirmation by miners. Specifically for Ethereum, it is the Heaviest Chain principle governed by the Ethash algorithm, but the commonality lies in the need for consensus confirmation by all miners, with the steps being algorithm + mining power + block confirmation. In the PoS model, the consensus governing the confirmation results is that of the staking nodes, and true random number confirmation can only be achieved in the fifth phase of the Merge. Until then, Ethereum will be a random walk digital game.

Based on discussions with PoW defenders, let us analyze the logic of the Vitalik team. In their view, transitioning to PoS is an inevitable path for TPS (transactions per second) upgrades------but behind this is a competition for capital (32 ETH) + high efficiency, in response to the competition from new public chains like Aptos/Sui in the Move ecosystem. The first step of the ETH2.0 roadmap starts with the Ethereum Beacon Chain, aiming to introduce a more secure and efficient proof-of-stake mechanism for the consensus layer of the Ethereum network, and after merging with ETH1.0, to escape the severe energy consumption, moving towards a consensus mechanism guided by proof of stake.

Let us understand the main events of the transition to PoS------on the Ethereum roadmap, "Ethereum 2.0" mainly has two upgrades: one is the change from PoW to PoS consensus; the other is the sharding technology for network performance expansion.

• "ETH 1" is now the "execution layer," handling transactions and execution;
• "ETH 2" will be the "consensus layer," handling proof of stake consensus;

After merging "ETH 1" and "ETH 2" into a single chain, there will no longer be two different Ethereum networks, and the term "ETH 2" will be completely abandoned, ultimately retaining only the overall concept of "Ethereum" (the terminology is only for updating naming purposes and will not change Ethereum's goals or roadmap).

From the perspective of the EthereumFair research team, these two upgrades are not effective only under the PoS model. Defending PoW is not only beneficial to miners, mining pools, and mining machine manufacturers; the PoS mechanism will not be the dividing line that changes everything. The PoS mechanism has been explored and is not a brand new algorithmic concept. Vitalik and others might say that 32 ETH is more decentralized than thousands of mining machines. However, compared to abandoning PoW and transitioning to PoS, a better solution is for Layer 1 to only do what is absolutely necessary, such as consensus and bookkeeping rights allocation, while all performance improvements can be placed on Layer 2.

"Sacrificing the security and decentralization of Layer 1 is completely unnecessary." This is the core idea of EthereumFair, which aligns with the official stance of BitCoke, which strategically supports the hard fork: security and stability are the cornerstones of public chain development; efficiency is not the only goal pursued by public chains. Many application scenarios prioritize security and stability, especially for large funds, such as lending and collateral. There are many solutions to improve the efficiency of PoW, such as Layer 2; PoS is not the best solution.

In the logic of the defenders, the transition to PoS also has greater negative impacts in terms of division. The core competitiveness of a public chain is not a specific mining model, but its ability to operate steadily and gradually build its own ecosystem. The current fork crisis will trigger a split in the community and on-chain ecosystem. This kind of split has happened before; after the 2016 DAO attack incident, the community that insisted on the immutability of the blockchain confirmed the state of the blocks after the attack, becoming ETC, while those who insisted on rolling back to the state before the hacker attack became today's ETH.

The subsequent fact is that ETC has been poorly managed, while the ETH ecosystem has thrived. Is this (ETC) a mistake? This time, the defenders need a belief support that legitimizes hard forks; this legitimacy is the best interpretation of the decentralization concept. The EthereumFair team's attitude is------a fork is absolutely not a simple division, but requires a clear understanding of reality and long-term construction. It can be assumed that the ETH-POW chain after the fork will encounter many problems, such as:

• Lack of on-chain DeFi/NFT/GameFi ecosystem
• Mainstream stablecoins like USDT/USDC not supporting it
• Lack of sufficient developers to update the client
• Insufficient number of network state confirmations
• Facing more rampant attacks from hackers

These difficulties objectively exist, but the rationality of the fork itself should not be questioned. Abandoning PoW will cause the most equitable mining mechanism envisioned by Satoshi Nakamoto to degenerate into a game of capital------in Ethereum 2.0, the minimum staking amount for nodes is 32 ETH. When transitioning to the PoS mechanism, all nodes in ETH will need to vote on each block, and only a block that receives 2/3 of the locked ETH votes from the entire network will be considered a valid node. This design inherently tends to expel small and micro retail investors, relying more on the support of whales. After adopting the PoS mechanism, to ensure network stability and enhance the ability to capture token value, increasing the staking amount is almost the only solution, which will further exclude decentralization.

Therefore, the much-discussed "Ethereum 2.0" plan, which seems to be an upgraded version of Ethereum, is actually a brand new project. Conventional forks often require computational power to make choices, with miners as the main characters; however, this PoS fork's focus is not on the competition for computational power, but on the game of capital. Currently, under the PoW state, there are a total of 14,516 nodes globally for Bitcoin, with over 13,097 full nodes, accounting for more than 90%, while Ethereum has a total of 4,896 nodes globally. After transitioning to PoS, the total staking amount across the network will significantly increase, but the degree of decentralization cannot be guaranteed.

In this game concerning the future, miners face a life-and-death choice: the first option is to sell their mining machines and use the sold ETH to participate in the PoS staking mechanism, becoming one among many nodes; the second option is to directly switch their mining machines to the ETC network, in other words, ETH2.0 will prompt the $19 billion mining industry to seek new gold mines; the third option is to hard fork ETH-POW, retaining the original PoW model and choosing to rebuild the PoW ecosystem------in a sense, this is the most difficult path, but it is the most in line with the spirit of decentralization.

This most difficult path has already received a response from the ecosystem------for example, the exchange Bitcoke not only supports hard fork token trading but also has invested $100 million in a leading ETH mining farm, which will fully support it. Bitcoke's strategic layout for mining farm investment------asset tokenization and free staking, lending, and trading in the global market, aims to develop DeFi. At this moment of the Ethereum Merge hard fork, it becomes the backing for the defenders.

Since the spirit of Satoshi Nakamoto in Bitcoin, Ethereum has been given high hopes in the crypto world, but as it has developed to this point, it has strayed further and further from its original path. This is the mission and return of the defenders------the concept of decentralization must be re-evaluated.

Part Two: The Route of Redemption

After reaching a consensus on the legitimacy of the hard fork, how to proceed with the fork has become the core focus of debate.

• Action-first faction: Led by exchanges like BitCoke, strategically supporting the hard fork and building an alliance of mining machine manufacturers, miners, and the market to reconstruct the ETHPOW ecosystem, leaving room for discussion on secondary liquidity;
• Ecosystem construction faction: Led by technical communities like EthereumFair, hoping to build a complete ETH-POW ecosystem that includes stablecoins and DeFi applications, continuing the current ecological scenario as much as possible;
• Waiting to pick peaches faction: ETC hopes to attract as much ETH mining power as possible to itself, and Conflux has initiated a community proposal to change its PoW mining algorithm to Ethash to facilitate miners' switching.

BitCoke has launched its official plan, with the following details: BitCoke supports all Ethereum hard fork tokens and related airdrops, BitCoke will launch hard fork token contracts, and BitCoke believes that hard fork tokens are severely undervalued, predicting that hard fork tokens may reach $1000; Sun Yuchen also stated that his USDD will support the ETHPOW chain after the fork, solving the issue of on-chain stablecoin inflow and outflow channels. However, Guo Hongcai's perspective is entirely focused on the miners themselves, believing that miners have contributed a lot to the ecosystem, and now they need to stand up to defend their interests…

It is worth mentioning that currently, the most vocal figure in the market, Bao Er Ye (Guo Hongcai), is overly focused on miners' interests. There is currently no clear development timeline, and whether it can attract enough developers, applications, and ordinary users to participate remains to be observed. Simply attracting miners to join does not have appeal for users; creating common interests between miners and users will truly bring the PoW chain to life after the fork.

Image source: https://ethereumpow.org/

Therefore, more ecological forces in the market will make better choices and development directions in the game. Capital will rush in first, and the Vitalik team also encourages miners to shift, which can both protect miners' interests and minimize damage to the Ethereum ecosystem. However, the potential dangers of rushing into ETC mining have already raised market concerns.

EthereumFair researchers stated, "When a large number of miners rush into ETC mining, it is a short-term benefit for ETC, but the secondary market must have sufficient liquidity to bear the pressure. With limited price increases, the result will be a significant increase in ETC difficulty, making it even harder to mine." The most important issue is that ETC's capacity is too limited to bear such a large amount of computational power. Although ETH graphics card mining machines are not as power-hungry as Bitcoin mining machines, and the price of shutting down is not as high as BTC, forcibly mining ETC is too competitive. Therefore, a large influx of miners will lead to internal competition, making the payback period lengthy.

What the crypto world needs is ETHPOW, not ETC. According to CoinMarketCap data, ETC is currently priced at about $40, approximately 1/50 of ETH. Unless ETC can rise to $2000, it cannot fully accommodate ETH mining power while maintaining the payback period. A 50-fold surge is an impossible scenario; viewing it rationally, this is not a way out for miners. Neuroscience Ph.D. @0xAA believes: "ETC cannot accommodate the mining power of ETH miners. The most beneficial solution for miners is to hard fork when Ethereum transitions to PoS, creating an ETH-PoW that is much more valuable than the current ETC chain. After all, the Ethereum ecosystem is much richer now than when ETC forked."

Final Chapter: Future Ecosystem Builders

In the history of Ethereum's development, this is the second global crisis. The last one proved the weakness of ETC but left a faint glow for the persistence of decentralization. This faint light is not enough to become a raging fire, but it has given sufficient legitimacy to hard forks.

PoW is currently the only blockchain system that has been verified to be completely decentralized and stable. All PoS public chain systems have encountered security or accessibility issues, fundamentally because PoS systems rely on centralized nodes. The fundamental difference between ETH and other public chains is PoW, and only PoW is something other public chains cannot achieve. The transition of ETH to PoS is akin to self-harm, losing its greatest advantage------degenerating to the same starting line as other second-tier public chains, where everyone's mechanism speed, fee rates, and security are the same. Why choose the Ethereum PoS chain? Is it just based on sentiment? This is the basis for the value judgment of BitCoke and its invested mining farms strategically supporting Ethereum's hard fork.

From a value perspective, BitCoke's viewpoint is representative; PoW is a heavy asset investment, PoW has value anchoring and support, while PoS is purely a financial capital game, and its value cannot be effectively supported. From a technical perspective, legitimacy is a fair definition of the objectivity of block confirmation, while from a consensus perspective, legitimacy is an effective adherence to and application of the PoW mechanism. There is no absolute superiority or inferiority between PoS and PoW; however, in the face of the pursuit of emerging public chains, Ethereum's internal conflict is undoubtedly an ineffective consumption of its own dominant position.

Image source: https://wenmerge.com/

ETHPOW is destined to have more than one chain, and the tension between users, miners, and the ecosystem will dominate the future direction of the fork. Ecosystem construction will become a long-term battleground after short-term revelry. This is the best of times; we can indulge in a revelry, and ordinary users will receive airdrops from various forked chains. This is the worst of times; we will witness the cruelty and bloodshed of ecological competition, and only then will the king of the PoW ecosystem be determined. ETC belongs to the mediocre, unable to bear the historical mission of the new forked chain, while new PoW chains like EthereumFair will have the opportunity to carve out a new territory------of course, which chain will ultimately prevail still needs the test of time.

The future will undoubtedly belong to builders who focus on ecosystem construction in the long term. In public chain competition, the ecosystem is the foundation of everything; users do not bear the responsibility for the survival of public chains. A better experience and economic returns are always the most primitive motivations for users. Building a higher-quality ETHPOW ecosystem is essential to ensure that the PoW chain after the fork remains evergreen rather than a fleeting moment, falling into nothingness. Below, we will introduce the development philosophy, technical strength, ecosystem construction, and progress of the Ethereum fork chain EthereumFair, which continues to use the PoW mining method, based on our research and interviews with the EthereumFair technical development team.

The development of public chains requires the support of accompanying infrastructure. From the user's perspective, a fully functional and user-friendly public chain is sufficiently attractive. In the words of the EthereumFair technical development team, "The ETH fork PoW is fair; it will not be dominated by a certain investment institution that occupies significant benefits early on. We hope that the funds and friends supporting EthereumFair will come to support the EthereumFair technical community to lead the promotion of the ETH fork chain. The Ethereum Foundation is transitioning to the PoS branch, and we will retain the original chain."

The Ethereum fork chain EthereumFair is led by the EthereumFair (ClassZZ) technical community, whose ClassZZ public chain PoW technology has successfully operated for three years. The current technical research and development team includes mathematical experts, chip experts, and developers with over six years of industry experience. Specifically, in terms of actions, the EthereumFair development team has already achieved the following functional list:

• Completed the research and development of cross-chain support for the ETHPOW chain
• Basic infrastructure such as testnets and browsers
• Financial facilities such as DeFi and stablecoins are ready.

It can be seen that for this fork, the EthereumFair community will support Ethereum's PoW mining model, maximizing the continuation of the on-chain ecosystem. The ecosystem is the foundation of public chain competition, and attracting enough miners to participate is crucial to building sufficient network security for a high-performance network, avoiding repeating the mistakes of ETC.

The EthereumFair team has set the mining difficulty coefficient from scratch, with the minimum requirement being that personal laptops can participate, benefiting ordinary users rather than large miners and mining pools. After addressing on-chain security issues, more participants are needed for co-construction. The forked chain should not be an exclusive ETC-style self-entertainment but an open chain of chains.

In terms of development, the EthereumFair community is currently focusing on implementing the test network, with an emphasis on difficulty control and block reward adjustments, striving to provide a mining program similar to Ethereum, making it convenient for all users to download. Additionally, it will provide basic infrastructure such as block explorers, with testing expected to begin as early as August.

EthereumFair also aims to absorb fresh blood from external mining pools and large miners into the existing public chain. Once the public chain's status stabilizes, it will engage in deep integration with mining machine manufacturers, such as negotiating with mining machine manufacturers for customized mining machines. The latest news is that for Ethereum's hard fork, the exchange BitCoke and its invested leading ETH mining farm will also fully support it.

Moreover, well-known funds and ecological partners will cooperate with the EthereumFair technical community to promote the ETH fork chain. For example, the EthereumFair L2 public chain ecological development team will also synchronize into the current fork, and other partners like bitkeep, swftc, and tokenpocket will provide deep support in wallet aspects, presenting the current Ethereum infrastructure and DEX as the earliest tools for developers and users.

As the first successful fork project of Ethereum, ETF pays tribute to all blockchain networks supporting the PoW consensus mechanism. The address 0x00000000219ab540356cbb839cbe05303d7705fa currently has a staking amount of 13,185,717 ETH, which will distribute tokens from st-eth according to the public key (transactions before September 6) to BTC token holders (55%) and DOGE token holders (15% each); then distribute according to addresses (no need to send transactions) to ETC and CZZ token holders (15% each).

This forked event is a traffic feast that no exchange will miss. Currently, the following exchanges' attitudes can be confirmed, and ecological construction will attract them to support in the secondary market, building trading depth for ETHPOW.

Mainstream exchanges that support or remain neutral

• BitCoke and its invested top mining farms publicly support Ethereum's hard fork, having officially announced three plans regarding Ethereum's hard fork: 1. BitCoke supports all Ethereum hard fork tokens and related airdrops; 2. BitCoke will launch hard fork token contracts; 3. BitCoke: hard fork tokens are severely undervalued and may reach $1000.
• OKX announced that it will actively monitor and support the Ethereum merge, and when the network upgrade takes effect, a potential Ethereum hard fork may occur. If there is sufficient demand, the platform will evaluate and launch new forked tokens.
• F2pool stated that Ethereum miners are the unsung heroes of the Ethereum ecosystem; whether miners support the Ethereum fork is no longer important, and the miner community will decide, continuing to provide mining pool services for ETH PoW.
• Poloniex of TRON announced on August 4 that it will support this ETH 2.0 upgrade and potential fork, and will launch two potential fork futures tokens and related trading markets on August 8. If this Ethereum fork is successful, it will donate some ETHW to the ETHW (Ethereum PoW fork chain) community and developers to help build the Ethereum ecosystem.
• Gate.io released a notice supporting the ETH pre-fork and opened trading announcements for forked coins "candies" in advance. If the hard fork is successful, ETHS will automatically convert to the upgraded ETH at a 1:1 ratio, and ETHS will exit the trading market.
• MEXC will support Ethereum's upgrade and potential hard fork. After the upgrade is completed, all ETH holders on MEXC will receive forked assets at a 1:1 ratio.
• Deribit derivatives exchange released a policy announcement regarding Ethereum's merge hard fork, stating that all tools' Deribit settlements will occur on the chain supported by the ETH Foundation (i.e., PoS or ETH2). If the value of the forked token exceeds 0.25% of ETH PoS and the new chain is stable and operating normally, Deribit will provide these forked tokens to users; however, if there are new tokens, they will not be considered margin.
• BitMEX will launch ETHPoW futures contract ETHPOWZ22 on August 9, with USDT (ERC-20) as margin and a maximum leverage of 2 times.

Huobi published an article titled "Regarding Support for ETH Potential Forks and Processing Plan Explanation," expressing an objective and neutral attitude towards the split assets created through hard forks (including but not limited to ETH). As long as the forked assets meet security requirements, it supports users holding assets and will provide trading services as soon as possible according to the rules.

Huobi will support the distribution of ETH fork chain assets (including but not limited to mainnet coins) that meet the following conditions:

1. Notify Huobi in advance before the fork and receive a clear reply;
2. Default to having strict two-way replay attack protection, allowing transactions on one chain to be invalid on the other chain;
3. The new chain will not be overwritten or eliminated by the original chain;
4. Transactions will have different formats, requiring all wallets (including lightweight clients) to upgrade to support the new chain;
5. Official client software must be released before the hard fork activation, and the client software must undergo public testing and evaluation.

The follow-up of centralized exchanges will solve the trading depth issue, while on-chain native financial assets will start from decentralized stablecoins, especially after Aave followed the sanctions, DAI will become even more decentralized, which is also beneficial for the development of native on-chain stablecoins. Specifically, although USDT and USDC will not publicly support PoW or PoS fork chains, the stabilization of on-chain assets to early ecological stability requires time accumulation, which is a gradual process. In the early stages, decentralized stablecoins like DAI may be used, as well as stablecoins coming from cross-chain.

Moreover, to further consolidate the on-chain ecosystem, the focus of this fork is that the ETHPOW main chain has increased cross-chain functionality, not an internal chain, but a POW + external chain, which can support the forked chain to any other chain. This underlying technology can ensure stable financial activities in the early stages of the public chain, avoiding the death spiral caused by excessive speculation. Because the defenders' hard fork this time has obtained legitimacy and spiritual support, the strategic deployment is also clear and explicit------what truly determines the success or failure of the fork is whether the ETHPOW ecosystem construction can achieve results. Without PoW, there are no miners; without an ecosystem, there is no future.