One of the guaranteed constants in crypto is that taking a week off will feel like missing an entire year.
While I was “gone,” the Ethereum merge date was officially set, the possibility of a hard fork became a reality, and a coordinated global attack ended Tornado Cash.
And if it wasn’t already obvious enough, everyone is seemingly focused on Ethereum.
Here’s a quick overview of what went down.
The merge is tentatively scheduled for September 15th/16th, making the switch from proof-of-work to proof-of-stake imminent. This upgrade has taken years. Phase 0 started at the end of 2020 and planning on Github spans as far back as 2015. The merge is as big of a deal as everyone is making it out to be.
Many critics point at the “likelihood” of the merge damaging Ethereum. While this doesn’t seem likely, it is certainly possible. To ease your mind, Vitalik just recently said the following at a conference in Seoul: “I don’t expect Ethereum to really be significantly harmed by another fork. My impression from pretty much everyone I talked to in the Ethereum ecosystem is that they’ve been completely supportive of the proof-of-stake effort and united around it.” There’s been a lot of rumors regarding how a fork could destroy stablecoins, lending services, and Dapps, but none of these threats seem to be legitimate.
It will not be socially acceptable or responsible for any crypto entity to support the Ethereum proof-of-work chain outside of miners trying to continue to generate a profit from mining. It would effectively be suicide. Nobody legitimate is going to jeopardize their longevity and take a stand on the Ethereum proof-of-work chain. As I say this, I am knocking on wood, preparing to look stupid. But in all seriousness, things should go well and we have good reason to have faith.
But that doesn’t mean the ETHPoW token won’t have or hold value. Bitcoin Cash and Ethereum Classic are great examples of this. Although most investors consider forks to be ghost chains, they still hold value because they have publicly listed tokens with price and value determined by traders.
The talk about the hard fork leads me to my second point - Ethereum holders are getting free tokens!
Hopefully I will be one of them - as you know, my Ethereum is largely tied up on Voyager, but I digress.
As long as Ethereum miners stick to their guns and continue mining on the old chain, we are going to receive 1:1 Ethereum 2.0 and Ethereum proof-of-work tokens. You might notice that a lot of people are distinguishing ETHPoS vs. ETHPoW, but it will eventually be Ethereum and something-yet-to-be-named when enough time passes.
For advanced arbitragoooors, there’s a big chance to scalp some serious profits here. But 99% of investors/traders should avoid getting fancy. Poloniex has an active IOU market right now for the new tokens and some traders are going to take loans with ETHPoW as collateral. Also worth noting is that bots are going to front run time-sensitive trades, so tread with caution. I’ll discuss Poloniex further below.
And lastly, we have to cover Tornado Cash.
Are we really surprised that the U.S. government came in hard and fast at another mixer? Bitcoin mixers have been the target of government crackdowns for years. This is yet another overreach and violation of our freedom, but it’s also par for the course. We need more details, but it’s a well-known fact that mixers assist criminals in laundering money, and that is not something that governments are likely to allow. Unfortunately, that means dropping the hammer and blasting the entire platform rather than attempting to stop the individuals who are guilty. Shutting down Tornado Cash is akin to banning Iphones because criminals are using them to coordinate their activity. But the government sees it differently.
The real shame is that coders of open source software are being arrested as a result, but I will reserve judgment on that situation until more details arise. If he was truly arrested simply for programming Tornado Cash, then this is a horrid violation… but we need to wait and see if that is all that he did.
Ethereum is the focal point of the market for now, which is unlikely to change anytime soon. An important metric to watch will be how many current investors opt into staking post-merge. The total locked supply is likely about to skyrocket.
Overall, there are a lot of bullish narratives for Ethereum and as a long-term trade, I love it.