Expert talks about how to maximise possible earnings by moving Etherium to Proof-of-Stake
Following Etherium’s transition to a new consensus algorithm called Proof-of-Stake (PoS), there is the potential for cryptocurrency forks to emerge. This is possible because of miners who may continue to maintain the PoW network to continue their operations. Against this backdrop, many centralized platforms have already spoken about their attitude towards forks, well, the management of cryptotracker CoinGecko has shared information about how, in theory, it will be possible to make money from the upcoming procedure. We tell you more about what’s going on.
As a reminder, CoinGecko is one of the most popular platforms with current data on cryptocurrencies and related topics. Here, first of all, there are coin rates, addresses of their correct contracts, real social media contacts of developers, information about exchanges and much more.
CoinGecko platform interface
CoinGecko is the main competitor for CoinMarketCap. Now the co-founder of this platform has commented on the topic of the forthcoming Etherium update and voiced recommendations for possible earnings from the procedure.
The prospect of earning has to do with the formation of forks - that is, alternative coins whose networks will replicate the state of the Etherium blockchain until its transition to PoS. This could be the already mentioned PoW-ETH, or b any alternative projects that any developers create.
This has happened before. For example, here is a map of the formation of Bitcoin forks. The peculiarity of forks is that new coins are credited to cryptocurrency holders’ personal non-custodial wallets, because the blockchains of the latter essentially copy the main chain. This is why holders of, for example, 1 BTC received 1 BCH in due course.
Bitcoin forks map
It is worth noting that the expert advice below does not guarantee earning opportunities and is not a financial recommendation. Still, anything can happen in the coin industry, and the most logical developments do not mean it will.
Also, one should take into consideration that in theory any forks may be an attempt to get user's private key, which will be needed to sign a transaction. Accordingly, you should only get involved in this topic if you understand the details and risks involved.
What will happen to Ether after the merger?
On his Twitter, CoinGecko co-founder Bobby Ong shared his strategies for the upcoming upgrade of Ether, also called a merger. According to Ong, ETH holders will be able to receive an equal number of ETH fork PoW coins. This is the basis for his proposed strategies.
Etherium exchange rate over the past 30 days
Ong noted that the easiest way to get “free” coins is to hold ETH on exchanges that support forks. However, holding ETH in hardware wallets is also suitable and in addition will entitle the trader to receive absolutely all fork tokens.
The easiest option is to hold the coins on an exchange that supports forks. Ideally, if the exchange also supports trading these tokens immediately. On some platforms, it may take several months to credit your account. Check your exchange’s policy regarding the upcoming merger.
Cryptocurrency exchange Binance has previously confirmed that it will give away forked tokens to ETH holders should they become available. However, it is important to understand that the platform's management can do this at any time convenient for it, and not, for example, immediately after the coin's appearance. In addition, the exchange will issue a separate statement for "unofficial forks", which means that users may not receive them in the end.
Binance cryptocurrency exchange promises to distribute ETH forks to users should they form
How to make money from Etherium ETH
To maximise profits, crypto-enthusiasts are also advised to take advantage of blockchain bridges and bring all the ETH they may have in alternative networks into the main Etherium network. The expert continues.
You won’t get ETH PoW for your coins on Optimism, Arbitrum, Polygon, Avalanche or any other second-tier protocol. Move them to the main Etherium network before merging to get fork tokens.
This is indeed a sound recommendation. Still, with a possible fork, new projects will take into account the state of the main Etherium network at the time of the upgrade. If a user has sent ETH to the Avalanche network via a blockchain bridge, those coins will not be accounted for.
According to Cointelegraph sources, a CoinGecko spokesperson also recommends taking Etherium out of decentralised protocols to provide liquidity. Another trick is borrowing Etherium coins from the Aave or Compound platforms. If it is obtained, the investor can also count on fork tokens.
ETH borrowing data on Compound
Finally, the final stage of the strategy from Ong is to be prepared to sell forks quickly. It is possible that once they start trading on major cryptocurrency exchanges, their price will rise quickly and then fall at the same rate, as there will be many people willing to sell forks at once. However, this is only a probability. As the situation with Uniswap tokens called Uni, which were distributed in September 2020, has shown, even "free" coins can rise in value over time. And by leaps and bounds.
Estimated rate of ETH PoW
Meanwhile, Etherium has moved a step closer to renewal. The PoS network called Beacon Chain today saw an update to Bellatrix. This is the final step towards a full transition to Proof-of-Stake. The final step will be the Paris update, which will take place next week.
Activation of the Bellatrix update on the Etherium network
Overall, Ong expects volatility in decentralised protocols amid the merger, as well as volatility in the price of Etherium itself. Whether he’s right or wrong we’ll find out soon enough.
Separately, we should note that developers will create some projects just to deceive users. They will try to get a signature or a private key from a certain address in order to withdraw someone else's assets from it on the regular Etherium network, because the private addresses and format in forks are the same as the original chain. That's why it's ideally worth withdrawing ETH and other tokens from a regular wallet to a third-party address before requesting to receive some obscure forked cryptocurrency.
Hackers are also waiting for an Etherium update
We think you need to be careful with the topic of possible forks of Etherium, as some hackers will want to use this event to scam users. The safest option here is to store ETH on a hardware wallet, which somehow won't expose the user's private key. Accordingly, switching the network in the wallet interface settings will be sufficient to receive forked tokens. However, if a novice user does not understand the specifics of blockchain and private keys, it is more reliable to hold coins on certain suitable exchanges.
Look for even more useful information in our Millionaires Crypto Chat. There we discuss other important developments in the world of blockchain and decentralisation.
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