NewsEthereum miners threaten to create their own blockchain

Ethereum miners threaten to create their own blockchain

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There are rumors that Ethereum miners want to split off from Ethereum’s blockchain after The Merge in September. Miners are in fact hit the hardest and would be able to make some more money this way. Is this true?

Taking a step back for a moment. Why would miners lose money after The Merge?

Earnings model for Ethereum miners

Currently, Ethereum has two blockchains. The first operates on proof of work (POW) and pretty much all payments, smart contracts, transactions and other activities take place on it. The second blockchain is called the beacon chain. This one uses proof of stake (POS), but currently no activity takes place on it.

That first POW blockchain works just like bitcoin: miners fill blocks with transactions and if they won the lottery then they get to add that block to the blockchain. For this they get 2 ether + transaction fee. A good earning model for miners.

Miners want hard fork Ethereum

The Merge merges these two blockchains, this means that all activities, transactions, etc of the first blockchain is combined with POS of the second blockchain. Miners become obsolete as a result.

For many, The Merge comes as a godsend, but miners obviously have different feelings about it. Chandler Guo, a prominent miner announced that he would be creating a hard fork execute on Ethereum’s blockchain so that POW can continue on its own chain as usual.

To support this, the not-yet-born Ethereum PoW version even has a website called ethereumpow.org.

Trick to make quick money by Ethereum miners

A hard fork refers to a split off of a blockchain, the split off retains the full history of the original but then follows its own path. Thousands of hard forks have been performed, on Ethereum but also on Bitcoin and most have died a quiet death.

“The fact that people think that an ETH PoW fork will be more than a trap for consumers means that we have learned nothing from almost a decade of hard forks,” said Pseudotheos, an Investment Research Partner at venture capital firm Variant .

“Almost every smart contract on the PoW fork will be broken in some capacity,” he said.

Ethereum founder Vitalik Buterin discussed at a conference in Seoul this topic. He says this is an idea of a few outsiders and calls it a trick to make quick money by miners and exchanges.

Why not go to Ethereum Classic?

A fork of Ethereum called Ethereum Classic has been around since 2016. This runs on proof of work and it is expected that miners can switch from Ethereum to Ethereum Classic, rather than creating a new fork.

“I think Ethereum Classic already has a superior community and a superior product for people with a preference for proof-of-work,” Buterin said.

Ethereum Classic and Ethereum shared the same history until 2016, but after that hard fork, both projects went their separate ways. Since then, there has been billions of dollars of DeFi activity on Ethereum, and this blockchain also houses billions of stablecoins.

Chainlink and stablecoins do not support hard fork Ethereum

Much of DeFi (decentralized finance) relies on price oracles to function and, like the publishers of stablecoin, the major Oracle network provider Chainlink has let it be known that it will not support a new POW network.

“Users should be aware that forked versions of the Ethereum blockchain, including PoW forks, are not supported by the Chainlink protocol,” said Chainlink.

USDT’s Tether is also not behind a POW hard fork. Suppose 100 million USDT have been issued on a blockchain and it experiences a hard fork, then 100 million USDT exist on both the first and second blockchains. These have value as long as those USDT can be exchanged for real dollars.

Pauolo Airdono revealed on Twitter that his Tether will only support the POS blockchain.

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