Should You Trade Potential Ethereum Fork Tokens On Poloniex With ETHS And ETHW?

As the Ethereum merge draws closer, people wonder if the network will split again into two parts. So far, there has not been any indication of the sort, although Poloniex thinks there may be. Users can now trade ETHS (the PoS currency) and ETHW (a chain that may resume proof-of-work). A remarkable decision, although one that will likely be futile. 

ETHS and ETHW On Poloniex

When a major blockchain undergoes a significant upgrade, it will often happen through a hard fork. Such forks are necessary and normal to implement crucial changes. For Ethereum, the upcoming switch from proof-of-work to proof-of-stake introduces a significant change in the consensus algorithm and everything that goes with it. Such a hard fork can prove challenging among community members. 

Under normal circumstances, there would be a real chance the network would split into two parts. One group would adopt the switch to proof-of-stake, whereas another might do the opposite. Miners will no longer be necessary when the consensus algorithm changes, which can leave many disgruntled. However, there has not been any indication that the hard fork will split the community. 

That makes the new trading pairs on Poloniex all the more curious. Introducing ETHS and ETHW pairs – for trading against USDD and USDT – seems premature and unnecessary. Although it isn’t uncommon for exchanges to trade potential hard fork tokens, there hasn’t been much opposition from Ethereum miners. A network split would not be in their best interest per se, although one never knows what the Merge may trigger. All eyes will be on Ethereum in September 2022. 

With no clear indication of parallel blockchains being created, trading ETHS and ETHW serves no immediate purpose. Even so, Poloniex users will receive the forked assets at a 1:1 ratio to their ETH balance after the Merge completes. Ḱeep in mind that the current ETHS and ETHW tokens are IOUs and have no value of their own. Additionally, traders can convert either token into ETH at the same 1:1 ratio before the upgrade.

Avoid Potential Fork Tokens And IOUs

While everyone is free to trade as they please, speculating on assets that are an IOU is often an unnecessary risk. Holding ETH will yield users the token that comes after the upgrade or tokenS in case a split occurs. There is no need to get ahead of oneself on this front, and dealing with ETHS and ETHW can pose a severe risk to one’s trading portfolio.

Unsurprisingly, the value of ETHW has already dropped significantly, as there is no indication proof-of-work will remain part of Ethereum after the Merge. Ove 92% of traders agree proof-of-stake is the only path forward. There seems to be no future for ETHW and users who trade it are likely to lose a lot of money.

Moreover, one has to wonder if trading such potential fork tokens creates more dissent among Ethereum supporters. The Merge is a necessary upgrade that virtually everyone seems to agree on. There is no need to plant ideas into people’s minds, certainly not for monetary gain. 

None of the information on this website is investment or financial advice. CryptoMode is not responsible for any financial losses sustained by acting on information provided on this website.