The additional cryptocurrency token investors received after the Ethereum blockchain transitioned to a new method of processing transactions has fallen 60% since trading began Thursday night.
EthereumPOW, as branching is known, represents inheritance computing blockchain operations that opted out of the software upgrade dubbed Merge. Ethereum has moved from a so-called proof-of-work system to a more energy-efficient proof-of-stake method to secure the network.
The cryptocurrency was listed at a price of up to $33, according to data from CoinMarketCap.com over the past 24 hours, and on exchanges such as FTX before Ether holders received the token. It was trading at around $10.85 at 1:39 p.m. New York. Ether, the blockchain’s native currency, fell for a fifth day, falling as much as 6% to $1,413.
“Ethereum proof of work does not have the support of users, developers, institutions and even most miners,” said Kunal Goel, Mumbai-based research analyst at Messari. “It’s probably going to fade because all the other non-community-supported forks in history like Bitcoin Cash, Bitcoin Satoshi’s Vision, and Ethereum Classic.”
The first few hours after the launch of ETHW, as the token is called, will be chaotic as all stablecoins and pegged assets drop to zero and users rush to redeem their tokens, Goel said.
“When the Ethereum Classic fork happened, the adoption was much lower. The ETHW fork will now also create a new version of all other assets on Ethereum,” Goel said.
Ethereum’s move to a more energy-efficient way to secure its network was met with resistance from a group of miners led by Chandler Guo, a veteran Ether miner who was also a major supporter of Ethereum Classic. , another PoW offshoot of Ethereum.
Joseph Lubin, CEO of ConsenSys and co-founder of Ethereum, said it’s like duplicating an important city without having the people and companies that make it special.
“It’s hard to imagine people putting valuable tokens on this network or trading or deploying new software when so much is broken on the network,” Lubin told Bloomberg in a video interview Thursday after the merger. “Essentially, it’s the work of opportunists who are probably interested in convincing people that this cult freight blockchain really works.”
The merger is just the start of a series of upcoming upgrades to Ethereum to make it more scalable and decentralized. Many challenges still await the second-largest cryptocurrency, including a potential regulatory backlash.
Ethereum Classic, which rallied strongly ahead of the merger, fell almost 8.3%.