What will happen after the Ethereum hard fork? How should we respond?

Author: olimpio

Source: olimpio's twitter

The recent hard fork of Ethereum is intensifying. After the merger, Ethereum will inevitably have a hard fork. In the event of a hard fork in Ethereum, as an ETH holder/investor, you might want to:

• Maximize ETH on the chain (exit centralized exchange)

• Apply for an ETH loan

• Dump all PoW assets for ETHPoW

• Have a ready-to-use account on an exchange to support forked chains

What will happen to the Ethereum hard fork?

If you understand the Bitcoin fork BCH/BTG, you may have a bottom line in your heart. BCH and BTG at that time may be the earliest free airdrop coins. Now, the prices of the two Bitcoin forks are as follows:

Bitcoin Cash (BCH) - Market Cap: $2 billion. Price: $140

Bitcoin Gold (BTG) - Market Cap: $5 million. Price: $30

And the current price of Bitcoin (BTC): $24,000

The supply of BCH, BTG, and BTC is the same, 21 million pieces. Imagine, if you support the hard fork of Ethereum, will it lead to the same goal? Let's take a closer look.

BCH price chart

When the merger of Ethereum occurs and ETH transitions to POS, there will be two chains: POW and POS.

Miners work hard to get the last value before selling their hardware:

They will work to keep POW Ethereum going, effectively hard forking the Ethereum blockchain.

After the hard fork, everything you previously owned on the Ethereum chain will be in the new POS chain, as well as in the existing POW chain:

• NFTs and assets in the wallet

• Provided liquidity (such as Uniswap)

• Borrowing (Aave, Compound positions)

That’s right, your on-chain assets will be duplicated.

When this happens, something will wreak havoc, especially in DeFi. For example, there will be 20,000 CryptoPunks and BAYC, 2 types of UNI, 2 types of ETH, 2 types of wBTC, and 2 types of USDC.

USDC is currently pegged 1:1 to the U.S. dollar and has a market capitalization of $54 billion.

After the hard fork of Ethereum, there will be a total of 108 billion USDC in the two chains, and only 54 billion USD in collateral to support USDC in actual circulation.

So all USDC in one of the chains will go to → 0, can you imagine which chain it will be?

Users will likely sell everything on the POW chain (USDC, USDT, DeFi tokens, meme coins, NFTs) for ETHPoW, which will be the only token with some speculative "value".

This could happen within the first block. Gas wars, MEV, bribery, these are bound to happen.

In the first few minutes of the fork, everyone will want ETHPoW. The price may even surpass ETH briefly

Everyone will:

• Dump everything they got on ETHPoW

• Send ETHPoW to any supported centralized exchange

• Finally, trade other assets such as ETH.

The result of these actions is most likely to send money to the robot for nothing.

For this scenario, Twitter user DavidHoffman.eth said, "The application layer of the DeFi proof-of-work ecosystem will divide by zero. It will implode."

So, should we prepare for the hard fork?

The following practices are for readers' reference only and do not constitute any investment advice.

• Withdraw all ETH from centralized exchanges to on-chain ETH

• If you hold stETH (one of the fastest selling assets), lend out on Aave, then borrow ETH or other assets. Monitor APY closely, it could skyrocket.

• Don't buy forks, it will plummet

• Investigate how to connect to the PoW chain after the merge (MetaMask and other wallets may not automatically connect)

• Cancel any of your Opensea bids as they will be accepted on the PoW chain and your WETHPoW will be withdrawn

• Remove liquidity from pools prior to consolidation. You'd better have ETH/USDC in the proof-of-work chain, not a PoW UNI-v2 ETH/USDC position.

If you don't do this ahead of time, you won't be able to remove liquidity in time (due to the large number of bots) and there will be no ETHPoW.

• Open an account with an exchange that supports ETHPoW so you can dump ETHPoW immediately after the merger.

• Use ETH to borrow and lend (Aave, Compound). If you have other assets, you may want to take an ETH loan to maximize your ETHPoW

It is easier to sell ETHPoW in CEX than to sell USDCPoW in DEX. Watch out for APY, it's likely to skyrocket.

Personally, I support POS and decentralization. Greedy miners want to sell ETHPoW to retail investors, don't believe this statement and buy ETHPoW. I will dump ETHPoW as soon as possible.

Of course, all of these are not really important, for me, the most important thing is ETH POS.

The merger of Ethereum will take place in September. Whether the prediction above will happen, we will wait and see.