ETHW fork 72 hours ago: Market value plummets and miners leave

More than 72 hours have passed since the birth of Ethereum fork network ETHW (EthereumPow). During this period, the ETHW network has been in turmoil. First, it used the same chain ID as the SmartBCH test network, which caused network connection problems; then the security agency pointed out that ETHW suffered a replay attack and lost 200 ETHW tokens.

In the secondary trading market, the ETHW token generated by the 1:1 mapping of the original ETH has been declining after a brief rise. As of September 19, the price of the asset fell to around US$5, a drop of more than 80% from the high point on the day of listing.

The continued decline in asset prices reflects the pessimism of coin holders about its development prospects, and ETHW, which advocates protecting the interests of PoW miners, is also being abandoned by miners.

According to 2miners data, on the day when the ETHW mainnet was launched, its total network computing power reached a maximum of 80.56 TH/s. By September 19, this value had dropped to 29.92 TH/s, a 62.8% drop from the peak, accounting for only 3.89% of the total computing power of 769 TH/s before the Ethereum mainnet merger.

The market value plummeted, miners left, and the embarrassing situation of ETHW was exposed 72 hours after the fork.

ETHW price keeps going down after listing

On September 15, Ethereum completed the merger and upgrade, and the consensus mechanism was changed from PoW (Proof of Work) to PoS (Proof of Stake). In the seven years before that, PoW miners had been responsible for the block packaging and verification of the Ethereum network, and received generous block rewards and handling fee rewards. After the merger, Ethereum under the PoW mechanism officially withdrew from the stage of history, but the original miners' mining machines and computing power did not disappear.

Under the banner of "protecting the interests of miners", Guo Hongcai (Bao Erye), an early KOL in the domestic cryptocurrency circle, and Sun Yuchen, the founder of TRON, as community leaders, opened the chapter of forking Ethereum. According to the plan, 24 hours after the Ethereum merger is completed, the forked network ETHW (EthereumPow) that continues to maintain the PoW consensus mechanism will be officially deployed, and then the chain ID of ETHW will be switched. In order to reserve sufficient time, the ETHW mainnet will be launched at a specified time after processing 2048 empty blocks.

But a small incident occurred during the launch of the ETHW mainnet.

On September 16, many users found that they were still unable to access ETHW’s blockchain using the official mainnet information, and could not connect to its network using encrypted wallets. Subsequently, BCH public chain expansion solution SmartBCH pointed out that ETHW had network connection problems, which may be due to the use of the same chain ID as the SmartBCH testnet.

This problem was subsequently fixed. The ETHW mainnet was launched, and some of Ethereum's original miners switched their computing power to the ETHW network, with the highest total network computing power reaching 80.56 TH/s.

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

According to the rules of previous blockchain forks, the price trend of the forked chain token after it goes online reflects the consensus behind it to a certain extent. On the OKX platform, ETHW opened at $15 and rose to $27.99 after it went online. This value is far from the price of around $1,600 before the Ethereum fork. In contrast, ETH maintained its previous price for a period of time after the merger.

After a brief surge, the price of ETHW quickly fell, and the closing price of the day fell to $12.08, down 56.8% from the highest point. In the following days, ETHW continued its downward trend. On September 19, ETHW fell to a minimum of $3.88, and then rebounded to around $5.15, down 81.6% from the high point on the day of listing.

Analysts believe that the sharp drop in ETHW in just 4 days was mainly due to the selling of holders who received token airdrops. According to data from OKEx ETHW browser on September 19, after the mainnet was launched, the network processed more than 9.56 billion ETHW transactions. According to its price trend, most users chose to sell after receiving the airdrop.

The sharp drop in hashrate shows that miners are leaving

The market sell-off of ETHW reflects that users are not optimistic about the prospects of this forked network, especially on September 18, when a security alert exacerbated outside concerns about its security.

According to monitoring by security agency BlockSec, an attacker has carried out a replay attack on the ETHW chain. Replay attacks usually occur after a blockchain network forks. Since the addresses and private keys on the two chains are the same, and the transaction formats are exactly the same, transactions on one chain are also completely "legal" on the other chain. Transactions initiated on one chain will also be confirmed if they are 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. Despite this, someone still found a loophole. According to analysis, the attacker first transferred 200 WETH to the ETH network through the Omni cross-chain bridge of the Gnosis chain, and then replayed the same message on the PoW chain to obtain an additional 200 ETHW.

This attack has caused users to question ETHW's technical capabilities and security. Subsequently, ETHW officially stated that it has tried to contact Omni Bridge to inform the bridge that it needs to correctly verify the actual chain ID of the cross-chain message. ETHW emphasized that "this is not a chain-level transaction replay, but a call data replay caused by a defect in a specific contract."

Whether it was the use of the same Chain ID as the SmartBCH testnet during the mainnet launch or the occurrence of replay attacks, the forked ETHW seemed unreliable. If these problems are considered minor technical issues that can be quickly resolved, then the collapse of public opinion is a huge blow to ETHW.

After the ETHW mainnet was launched, several mining pools including F2Pool, Poolin and BTC.com announced their support for ETHW mining. The ETHW community also cooperated to launch a backup mining pool, Ethwmine, which is committed to providing long-term mining pool services for ETHW.

These mining pools serving miners hope to continue to earn revenue from miners who have transferred to ETHW. However, the computing power of the ETHW network has been rapidly lost in just a few days.

According to 2miners data on September 19, the total computing power of ETHW is 29.92TH/s, which is 62.8% lower than the peak of 80.56 TH/s after the mainnet was launched. According to the pre-fork concept, ETHW will have the opportunity to take over most of the computing power of the original Ethereum network, but its current computing power level only accounts for 3.89% of the total computing power of 769 TH/s before the merger of the Ethereum mainnet.

In contrast, networks using the same mining algorithm, such as ETC, RVN, and ERGO, have seen a significant increase in computing power, especially ETC, which has increased from 50 TH/s before the merger to more than 200 TH/s. This shows that ETHW is not the only option for the original Ethereum miners.

ETHW network computing power has experienced a significant loss

As the price of ETHW continues to fall, more and more miners find it unprofitable to work on this forked chain, so it is not surprising that the computing power has dropped sharply. In the context of the weak consensus foundation, the miners that ETHW relies on the most are gradually leaving, casting a shadow on the future of this forked chain.

In the consensus of the crypto industry, the value of the new generation of public chains depends on the construction of the on-chain ecology. The more prosperous the on-chain ecology and the more active the on-chain activities, the more recognized the value of the public chain is. Before the ETH merger, Uniswap, OpenSea, USDT issuer Tether, USDC issuer Circle and other mainstream DeFi applications and stablecoin issuers all stated that they would not support any forked chains, which directly led to ETHW being unable to inherit the mainstream on-chain applications of the original Ethereum. In other words, the current ETHW on-chain ecology is very weak.

According to OKEx data, the number of active addresses on the ETHW chain was only 27,100 on September 19, a decrease of 226,400 from the previous day, indicating that the enthusiasm of users on the chain to participate in ETHW has dropped significantly. 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 1.4268 million.

When the token market value plummets, miners and users leave, the construction of the on-chain ecosystem almost needs to start from scratch. ETHW's opening is overshadowed. How to gain a foothold among a number of new and old blockchains will become its biggest challenge.