$ETH: Compound Founder Offers Words of Advice Regarding Ethereum’s Merge Event
On Wednesday (August 17), Compound Labs Co-Founder Robert Leshner gave $ETH some valuable advice regarding Ethereum’s upcoming “Merge” protocol upgrade, which is when the Ethereum network is making the transition from proof-of-work (PoW) to proof-of-stake (PoS).
Here is how Ethereum Foundation explains The Merge, which is expected to take place around September 15:
“The Merge represents the joining of the existing execution layer of Ethereum (the Mainnet we use today) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminates the need for energy-intensive mining and instead secures the network using staked ETH. A truly exciting step in realizing the Ethereum vision – more scalability, security, and sustainability.
“It’s important to remember that initially, the Beacon Chain shipped separately from Mainnet. Ethereum Mainnet – with all it’s accounts, balances, smart contracts, and blockchain state – continues to be secured by proof-of-work, even while the Beacon Chain runs in parallel using proof-of-stake. The approaching Merge is when these two systems finally come together, and proof-of-work is replaced permanently by proof-of-stake.
“Let’s consider an analogy. Imagine Ethereum is a spaceship that isn’t quite ready for an interstellar voyage. With the Beacon Chain, the community has built a new engine and a hardened hull. After significant testing, it’s almost time to hot-swap the new engine for the old mid-flight. This will merge the new, more efficient engine into the existing ship, ready to put in some serious lightyears and take on the universe.“
On August 5, CoinDesk reported that TRON founder had recently said that “he will support development on the existing Ethereum network following the expected merge in September.”
The CoinDesk report went on to say:
“Developers say the move away from a proof-of-work (PoW) system will make the network much cheaper, faster and environmentally friendly. It will also mean the end of an income stream for Ethereum miners, who are rewarded with ether (ETH) tokens for supplying resources to the blockchain. Miners produced over $620 million worth of ether in July alone, data show, making The Merge akin to a death knell for a significant chunk of cash.
“That has prompted some prominent Chinese miners to propose a hard fork, so even as Ethereum undergoes The Merge and becomes validated by stakers, the miners will continue to support a newly separated PoW version of the chain – a move that could theoretically keep their financial activity intact.“
On August 6, popular pseudonymous crypto analyst “Hasu”, who is the Stratey Lead at Flashbots, took to Twitter to talk about this alleged attempt by some miners to create a new fork of Ethereum that uses PoW consensus:
He then added:
“a lot of hashpower does not give this chain any significant value… the chance that a major stablecoin will honor redemptions on this fork over eth2 is not 5%, its not 1%, its a cold zero. anyone who says otherwise is a grifter… if anything goes wrong with the merge, it just gets delayed until the problems are fixed and then the merge happens a few weeks later… no one in the eth community apart from miners want to stay on proof of work… this fork chain will be a giant retail trap. miners, exchanges, traders are all trying to talk it up for their own self-interested reasons…
“no one wants to use or build ethpow. i have studied the etc, bch, and bsv forks and these were actually dividing their respective communities. in all cases, their minorities were actual believers and not in it for a short-term trade. ethpow doesnt have 1% of that support… crypto is full of bad projects that only exist to dump on retail, but that doesn’t make it ok to support them. the fact that ghost chains like etc still exist does not vindicate that point… although most alt chains today are forks of ethereum, none has forked ethereum state. not because they didnt think of it but because its a completely stupid idea“
Anyway, earlier today, Compound Labs Co-Founder Robert Leshner took to Twitter to offer some advice regarding the Merge:
Leshner went on to say:
“First things first, don’t fall for scams. In times of great uncertainty, people question things less. Be extra frosty about what you read, click, and sign… Don’t use too much leverage, take too much risk, or do something stupid with your portfolio. This is not the time to get caught up in mania. Volatility may be really high, in both directions. Make sure your assets are custodied safely. That could be on an exchange you trust, or on a hardware wallet you control. If you haven’t thought about security lately, now is a great time to revisit it.
“If Ethereum forks (such as a proof of work chain splitting off), the ‘state’ of Ethereum won’t transfer with it. Every stablecoin and DeFi application on the fork is likely to fail immediately. You wont suddenly be double wealthy. Be extremely careful about signing transactions on a fork chain; you have one private key that works on both chains, and a miner could potentially replay a transaction on Ethereum. Don’t ‘sell all my worthless (POW) USDC for a little bit of (POW) Ether’. If you’re not sure what to do, do nothing. Seriously.“
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