72 Hours After ETHW Fork: Market Value Plummets, Miners Depart

Author: Kyle, Honeypot Tech

It has been over 72 hours since the birth of the Ethereum fork network ETHW (EthereumPow). During this period, the ETHW network has faced numerous issues, starting with the use of the same chain ID as the SmartBCH testnet, which caused connection problems; subsequently, security agencies pointed out that ETHW suffered a replay attack, resulting in a loss of 200 ETHW tokens.

In the secondary trading market, the ETHW tokens, generated by a 1:1 mapping from the original ETH, experienced a brief rise before declining sharply. As of September 19, the asset price had dropped to around $5, more than 80% lower than its peak on the day of launch.

The continuous decline in asset prices reflects the pessimism of token holders regarding its development prospects, and ETHW, which claims to protect the interests of PoW miners, is also facing abandonment by miners.

Data from 2miners shows that on the day of the ETHW mainnet launch, its total network hash rate peaked at 80.56 TH/s. By September 19, this figure had fallen to 29.92 TH/s, a decrease of 62.8% from the peak, accounting for only 3.89% of the total hash rate of 769 TH/s before Ethereum's merge.

With the market cap plummeting and miners leaving, the plight of ETHW after 72 hours of forking has become apparent.

ETHW's Price Decline After Launch

On September 15, Ethereum completed its merge upgrade, transitioning its consensus mechanism from PoW (Proof of Work) to PoS (Proof of Stake). For the previous seven years, PoW miners had been responsible for block packaging and verification on the Ethereum network, earning substantial block rewards and transaction fees. After the merge, Ethereum under the PoW mechanism officially exited the historical stage, but the original miners' machines and hash power did not disappear.

Under the banner of "defending miners' interests," early crypto KOL Guo Hongcai (Bao Er Ye) and Tron founder Justin Sun, as community leaders, opened the chapter of forking Ethereum. According to the plan, 24 hours after the completion of Ethereum's merge, the forked network ETHW (EthereumPow), which continues to maintain the PoW consensus mechanism, would officially deploy its mainnet, after which the ETHW chain ID would be switched. To allow sufficient time, the ETHW mainnet would launch after processing 2048 empty blocks.

However, a small incident occurred during the launch of the ETHW mainnet.

On September 16, many users found that they still could not access the blockchain using the official mainnet information released by ETHW and could not connect to its network using crypto wallets. Subsequently, the BCH public chain expansion plan SmartBCH pointed out that the connection issues with ETHW might be due to its use of the same chain ID as the SmartBCH testnet.

This issue was later resolved. The ETHW mainnet went live, and some original Ethereum miners switched their hash power to the ETHW network, with its total network hash rate peaking at 80.56 TH/s.

At the same time, as a forked network of Ethereum, ETHW also airdropped tokens to all ETH holders at a 1:1 ratio. Currently, trading platforms such as OKX, FTX, and Bitfinex have launched ETHW trading markets.

According to the historical trends of blockchain forks, the price movement of forked chain tokens after launch reflects the underlying consensus foundation to some extent. On the OKX platform, ETHW opened at $15 and briefly rose to $27.99, a figure far from Ethereum's pre-fork price of around $1600. In contrast, ETH maintained its previous price for some time after the merge.

After a brief spike, the price of ETHW quickly fell, closing at $12.08 on the same day, down 56.8% from its peak. In the following days, ETHW continued its downward trend, dropping to a low of $3.88 on September 19, before rebounding to around $5.15, a decline of 81.6% compared to its peak on the day of launch.

Analysts believe that the significant drop in ETHW within just four days is mainly due to the sell-off by holders who received token airdrops. According to data from the OKLink ETHW explorer on September 19, after the mainnet launch, the network processed over 9.56 billion ETHW in transaction volume, indicating that most users chose to sell after receiving the airdrop.

Sharp Decline in Hash Rate Indicates Miners Are Leaving

The market sell-off of ETHW reflects users' lack of optimism about the future of this forked network, especially on September 18, when a security alert heightened concerns about its safety.

According to security agency BlockSec's monitoring, attackers executed a replay attack on the ETHW chain. Replay attacks typically occur after a blockchain network forks; since the addresses and private keys on both chains are the same, and the transaction formats are identical, a transaction on one chain is also "valid" on the other. A transaction initiated on one chain can be confirmed if replayed on the other chain.

During the fork preparation period, the ETHW team implemented replay protection at the code level, requiring all transactions to be signed with the chain ID. Nevertheless, some individuals found a loophole. Analysts noted that the attackers first transferred 200 WETH to the ETH network via the Omni cross-chain bridge on the Gnosis chain, then replayed the same message on the PoW chain, obtaining an additional 200 ETHW.

This attack raised doubts among users about ETHW's technical capabilities and security. Subsequently, the ETHW official statement indicated that they had attempted to contact Omni Bridge to inform them that the bridge needed to correctly verify the actual chain ID of cross-chain messages. ETHW emphasized, "This is not a chain-level transaction replay, but a replay of call data due to a specific contract flaw."

Whether it was the use of the same chain ID as the SmartBCH testnet during the mainnet launch or the occurrence of the replay attack, both made the forked ETHW appear unreliable. If these issues are considered minor technical problems that can be quickly resolved, the erosion of trust among users poses a significant blow to ETHW.

After the launch of the ETHW mainnet, several mining pools, including F2Pool, Poolin, and BTC.com, announced support for ETHW mining. The ETHW community also collaborated to launch a backup mining pool, Ethwmine, dedicated to providing long-term mining pool services for ETHW.

These mining pools serving miners hope to continue generating revenue from miners who have transitioned to ETHW. However, the hash rate of the ETHW network has rapidly declined within just a few days.

According to data from 2miners on September 19, the total network hash rate of ETHW was 29.92 TH/s, a drop of 62.8% from the peak of 80.56 TH/s after the mainnet launch. According to pre-fork expectations, ETHW was supposed to inherit the majority of the original Ethereum network's hash power, but its current hash rate level accounts for only 3.89% of the total hash rate of 769 TH/s before Ethereum's merge.

In contrast, networks like ETC, RVN, and ERGO, which use the same mining algorithm, have seen significant increases in hash rates, especially ETC, which surged from 50 TH/s before the merge to over 200 TH/s, indicating that ETHW is not the only option for original Ethereum miners.

As the price of ETHW continues to decline, more and more miners find it unprofitable to mine on this forked chain, making the sharp drop in hash rate unsurprising. In a context where the consensus foundation is already weak, the miner group that ETHW relies on the most is gradually leaving, casting a shadow over the future of this forked chain.

In the consensus of the crypto industry, the value of a new generation of public chains depends on the construction of the on-chain ecosystem; the more prosperous the on-chain ecosystem and the more active the on-chain activities, the more the public chain's value is recognized. However, before Ethereum's merge, mainstream DeFi applications and stablecoin issuers such as Uniswap, OpenSea, Tether (USDT), and Circle (USDC) all stated that they do not support any forked chains, which directly led to ETHW's inability to inherit the mainstream on-chain applications of original Ethereum. In other words, the current on-chain ecosystem of ETHW is very weak.

According to data from OKLink, on September 19, the number of active addresses on the ETHW chain was only 27,100, a decrease of 226,400 from the previous day, indicating a significant drop in user participation in ETHW. In contrast, the number of active addresses on the ETH network during the same period was 487,700, and the number of active addresses on the BNB Chain was 1,426,800.

With the market cap of the token plummeting, miners and users leaving, and the construction of the on-chain ecosystem needing to start almost from scratch, the opening chapter of ETHW appears dim, and how to establish itself among a multitude of new and old public chains will become its greatest challenge.