Thread by @VivekVentures

The Merge has been part of the Ethereum roadmap for 6+ years: a community-wide effort telegraphed from the early days

Yet now, less than 8 weeks away from mainnet Merge, a wave of doubt is rising focused on a hostile PoW fork

Here's why a PoW ETH fork is a *non-event*:

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First, what is a fork?

The ability to fork is a *fundamental right* for a blockchain's community. Forks provide the community the ability to choose; forks represent a right to underlying freedom

There are 2 types of forks - soft forks and hard forks - with key traits:

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Soft fork: a "software upgrade" for a blockchain which is backward compatible with blocks prior to the fork

Hard fork: adds a fundamental update which is no longer backward compatible

The ETH Merge will be a hard fork into a fully PoS chain *no longer secured by miners*

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Soft fork: if the update is accepted by all users - the end result is a single blockchain

Hard fork: could cause a split into an original chain and a new chain with the update. But - if the update is accepted by the whole community, the end result is also a single chain

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How does this relate to the Merge?

The Merge has been a universal, widely broadcasted goal to upgrade ETH into an economically and environmentally sustainable blockchain

Any Merge hard fork perpetuating the original Proof of Work chain is detrimental to that goal

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A PoW hard fork would only occur if existing miners keep mining PoW ETH rather than updating client software to PoS prior to the Merge

Does it make economic sense for a miner to keep mining PoW? To maximize profit, maybe.

But it creates a ghost chain with no legitimacy

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Ethereum is not a single purpose blockchain whose job is to secure a store of value by maximizing miner profits

(That's #Bitcoin for #BTC)

Ethereum has a thriving DeFi, stablecoin, and NFT economy running on top of it which will be *more secure* under PoS and *not* PoW

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If a miner-led chain split occurs, the Ethereum economy will exist on two chains:

ETH token, DeFi apps, stablecoins, NFTs will exist on the post-Merge PoS chain

And ghost clones of the exact same assets will exist on the PoW chain - including "PoW ETH" - causing chaos

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Some examples of chaos:

There is $65bn of USDT and $55bn of USDC on ETH today. In a chain split, this amount would double

We cannot print new dollars (we are not the Fed). So, USDT and USDC would need to go to zero on one chain (the PoW chain) to stay redeemable for USD

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https://twitter.com/paoloardoino/status/1554352763584356352

Chaotic outcome: If stablecoins on PoW ETH go to 0, then all liquidity pools on PoW AMMs with stablecoin vs token pairs break, and tokens on PoW ETH can't be traded

More chaos: The same happens with the cloned PoW WBTC on PoW ETH - it goes to zero (can't create more BTC)

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Chaotic outcome: if PoW WBTC on PoW ETH goes to zero, then all debt vaults (Maker, Aave) that use WBTC as collateral become undercollateralized and will need to be liquidated

If the vaults were used to borrow stablecoins, and if stablecoins go to zero, how do we repay?

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We could go on, but it is a waste of mental space

Ethereum has a responsibility: it represents legitimacy for the economy built on top of it. ETH stands for more than near-term profit maximization

Thus, all the legitimate apps, stablecoins, NFTs will pick the PoS chain

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The PoS ETH chain allows for better security, decentralization, economic and environmental sustainability - and players in the ETH economy will seamlessly move to PoS

The *only* actors that will sustain the PoW fork are profit mercenaries that want to sell their PoW ETH

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Because nothing else will work!

There will be no DeFi to use PoW ETH, no stablecoins to borrow against PoW ETH, no staking of PoW ETH

The only game is hoping a centralized exchange lists PoW ETH to sell

Hence, the *only purpose* of the PoW ETH fork is to dump PoW ETH

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At the end of the day, the Merge will succeed, and the Ethereum economy will seamlessly thrive on the PoS ETH chain

Even if there are 10 PoW forks, they will have no activity, no users, no assets (except hot potato PoW ETH waiting for CEX liquidity), and no *legitimacy*

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PoW ETH has no community except profit mercenaries

As @VitalikButerin said, "even a billion dollars of capital cannot compete with a project having a soul"

PoW ETH will not have a billion dollars, and most certainly will not have a soul

*PoW ETH will be a non-event*

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Few additional resources -

@ryanberckmans has a complementary thread on distractions caused by a PoW fork:

https://twitter.com/ryanberckmans/status/1554596829907525636?s=20&t=gkrJ78SZ_HO4ml2Ud_I1tg

And @lemiscate has detailed analysis of what happens to DeFi on PoW ETH:

https://twitter.com/lemiscate/status/1554041635369017344?s=20&t=gkrJ78SZ_HO4ml2Ud_I1tg

Lastly, here's an overview of what PoS $ETH looks like post Merge and why it results in a more secure, more decentralized, more economically and environmentally sustainable blockchain:

https://twitter.com/VivekVentures/status/1545985708858302464?s=20&t=gkrJ78SZ_HO4ml2Ud_I1tg

#Ethereum #ETH