What Is EthereumPOW? | Notum
Dec 08, 20226 min read
EthereumPoW is an ambitious project that managed to make a lot of noise. The project flew to the moon and back in a short period. Today, when the hype has faded a little, we suggest you find out what kind of cryptocurrency it is, who is behind it, and what its purpose and prospects are.
What Is EthereumPoW?
EthereumPoW, as the name suggests, is a fork from Ethereum whose founders adhere to the Proof of Work (PoW) consensus. On the contrary, in Ethereum itself, they stick to Proof of Stake (PoS) after the Merge update. In the meantime, it is important to know that thanks to PoW, the founders of the fork managed to attract Ethereum miners to their side. To be more precise, the Ethereum miners were the people who launched EthereumPoW.
The History of EthereumPoW
Conversations about EthereumPoW began in August — on the eve of the Merge update, designed to switch Ethereum to the Proof of Stake. When The Merge was updated on the main Ethereum network on September 15, a network hard fork called EthereumPoW was launched during the day, still supporting mining. The project quickly found major supporters and opponents, appeared on leading trading platforms, and the rate of its ETHW token managed to both enrich early investors and deprive them of all savings. The largest crypto exchanges announced support for this version of the network and credited users with ETH and WETH with new ETHW tokens in a ratio of 1:1. The initiator of the hard fork was the famous Chinese miner Chandler Guo. Chandler enlisted the support of other ETH miners and threatened Vitalik Buterin’s team with a fork in case of switching to PoS. Buterin urged miners to abandon the branch launch and advised PoW supporters to pay attention to Ethereum Classic.
By the way, this is not the first time Chandler has supported the preservation of the old version of Ethereum. In 2016, when Ethereum Classic (ETC) emerged as a result of another hard fork, the Chinese miner was the main supporter of it. After the network launch, thousands of miners who were forced to stop mining Ethereum switched to EthereumPoW pools.
The main supporters of ETHW are former ETH miners. But their activity is not so great — some of the miners went to Ethereum Classic, others to the Ravencoin network. At the time of publication, the ETHW hashrate is only 18.52 TH/s. For comparison, ETC has 136.94 TH/s.
Many mining pools have agreed to support EthereumPoW. These include such well-known pools as F2Pool, 2Miners, and WoolyPooly. Moreover, Binance launched its own pool for mining ETHW at the end of September. Miners joining the pool can use GPU and ASICs to mine cryptocurrency. In addition to this, the pool does not charge fees to users. Many users criticized Binance for supporting EthereumPoW. However, the company has repeatedly stated that ETHW tokens have not been listed, and the exchange does not support ETHW deposits and trading.
Ethereum Features: ETHW VS. ETH
When we talk about EthereumPoW and the differences between it and Ethereum, the first thing that comes to mind is the different consensus protocols. Proof of Work (PoW) and Proof of Stake (PoS) are the two most popular mechanisms supporting blockchain security. PoW is supported by Bitcoin, Litecoin, ZCash, and other traditional cryptocurrencies. PoS is supported by Solana, Cardano, Ethereum, and other advanced blockchains, around which an ecosystem of DeFi has formed.
If we do not go into details, then the difference between PoW and PoS can be described as follows:
Within the framework of PoW, there is a competition between miners fighting over who will solve the mathematical puzzle first and add a new block. That is, in PoW, the main criterion for success is computing power. In PoS, there is competition between token holders. Those with a larger amount have a better chance of confirming transactions and therefore receive rewards.
There are supporters of both PoW and PoS. The most common opinion is that PoW is more reliable but extremely energy-consuming (harms the environment), and PoS is more cost-effective but centralized.
ETHW VS. ETH: EIP-1559
The next major difference is the rejection of the EIP-1559 update that occurred as part of the London Hard Fork. London Hard Fork included several updates aimed at increasing scalability and reducing gas fees. The most famous and controversial was the update EIP-1559. In simple words, EIP-1559 is a solution for “burning” most of the tokens that came to the network from users who paid for transfers.
Recall that before the update, miners could choose transactions in which users paid high fees. Thus, these transactions were processed among the first, and miners received a greater reward. As part of the update, the concept of a “base fee” was introduced, a fee that users must pay for their transactions to be added to the block (this fee depends on the network congestion).
In addition, users who want to speed up their transactions can pay priority fees. But the most interesting thing is that during the EIP-1559 update, a burning mechanism was introduced, as a result of which a part of each transaction fee is burned, in other words, removed from circulation. While this may have a positive impact on the price of a digital asset, it has a negative impact on miners’ income. Obviously, the miners were dissatisfied with the burning tokens at their expense, so this update was canceled within EthereumPoW.
In a tweet on October 1, EthereumPoW announced that the first batch of ecosystem services and decentralized applications was launched. However, the team stressed that they could not approve projects or verify their legitimacy. Instead, users are encouraged to independently study the projects they are interested in. Now, the EthereumPoW community has a choice — bridges between networks, NFT, and decentralized exchanges (DEX) were presented.
The ad gave the result. After a prolonged decline, on October 2, the OKLink service recorded an increase in active addresses on the ETHW network — by more than 5,000.
Here are a couple of examples of such services:
YayaSea and OpenW are local analogs of the OpenSea NFT marketplace. Both Ethereum tops (Bored Apes or CloneX) and their own lines (Moon Ape POW Club, UNIW PUNKS) are published as part of the marketplaces.
HipPOWSwap is the first DEX ecosystem. There is a proprietary HSWAP token and the ability to exchange your ETHW for KPOW, USDT, USDC, WETHW, and, of course, HSWAP itself.
The native cryptocurrency EthereumPoW received the ticker ETHW. It performs the same functions as before ETH:
fees for money transfers;
unit of exchange in decentralized applications;
trading on centralized and decentralized exchanges.
After branching, ETH holders could receive an equal amount of ETHW as a bonus. This is not a new practice. For example, in the past, BTC owners could receive BCH coins. The distribution of ETHW tokens among ETH holders was carried out by major exchanges, including Bybit and Binance. The first centralized exchanges to launch ETHW trading were Bybit, FTX, MEXC, and Gate.io.
You may have heard of such a token as Wrapped Ethereum (WETH). The fact is that ETH was created before the appearance of the Ethereum ERC-20 standard. Because of this, difficulties may arise when exchanging ETH for UNI, MANA, or other ERC-20 tokens.
WETH comes to the rescue. This is a kind of “stablecoin” of the ERC-20 standard, pegged not to the dollar exchange rate but to the ETH exchange rate. So you can easily exchange WETH for other tokens and vice versa.
The Ethereum Proof of Work network inherited the same technology. And it, of course, needed its own analog. This is the Wrapped Ethereum Proof of Work or WETHW. However, the Ethereum PoW ecosystem is just beginning its journey, and there is not a large selection of tokens for which WETHW can be exchanged.
EthereumPoW is a young project whose prospects are too early to talk about. Nevertheless, it managed both to attract attention and, on the contrary, to disappoint part of the community. Right now, Chandler Guo’s team is busy developing the dApps ecosystem, which will be interesting to watch. The future of Ethereum PoW will depend on whether the key decentralized applications of Ethereum will be deployed in the “new old” network. They are the main driver of the growth of the Ethereum ecosystem.
Fortunately, the first applications have already been announced. So, we will soon find out if EthereumPoW is just a toy for miners or a platform with a real application. Moreover, the number of miners is not only not decreasing, but the network’s hashrate is gradually growing. This indirectly indicates preserving a part of the community around ETHW and is a positive factor.