How to take advantage of the Ethereum Merge
Probably the most momentous upgrade in the history of blockchain technology is scheduled to take place this month. The upcoming “merge” is intended to make the Ethereum blockchain much more powerful by transitioning to the proof-of-stake algorithm.
Perhaps the biggest upgrade in blockchain history is expected to be implemented this month. Not only the existing Ethereum investors are waiting for the Ethereum blockchain to make the transition to the proof-of-stake algorithm. Coingecko Founder Bobby Ong discusses ways to take advantage of this upgrade. At the beginning there is a chance for an Ethereum PoW token airdrop for all ETH token holders.
After the switch, ETH miners cannot easily continue their mining operations. Some of them therefore want to initiate an ETH fork to keep an Ethereum PoW version running so that they can continue mining in the future.
In his statement , Ongs advises that ETH owners should first move their funds from centralized exchanges and non-custodial wallets to a hardware wallet in order to gain complete, proprietary control. In return, they will receive a free PoW token after the merge.
Don’t keep Ethereum on a Layer 2 chain
Ongs goes on to explain that ETH owners should keep their holdings away from Layer 2 to benefit from the merger. The reason is that holding ETH on Ethereum alternatives like Optimism and Arbitrum does not guarantee that the holders will receive the PoW tokens. Before the merge, it is important to keep all Eth on exchanges that support the PoW tokens. Once upgraded, owners can then move the tokens wherever they want.
“For exchanges that support the merge, this is probably the easiest option as you get the fork tokens without any effort on your part. Ideally, the exchange also supports trading. However, some exchanges may take months to post to your account. Check your exchange’s policies for the upcoming merge.”
Ong also knows that there are decentralized exchanges (DEX) on the ETH PoW chain that can help unpack WETH PoW tokens. However, this would be complicated and risky in a new, still unstable ecosystem. For this reason it is better to unpack WETH before merging.
Ong further advises that investors hold off initially but provide liquidity after the merge as ETH used to provide liquidity would not receive PoW tokens.
Additionally, he advises borrowing ETH from Aave and other lending platforms ahead of the snapshots to get more PoW tokens.