Geeks of utopia
Its funny in ways that my time wasting antics of youth are now leverage-able in the saga that is ETH merge. I used to spend nights playing StarCraft ladder games against mostly Korean players; me getting beaten nearly every single time. Yet those story lines are a welcome noise in the maelstrom that is the ETH merge - largely in-part to efforts of Kevin Zhou (Galois Capital). If you wish to get a run-down of the current thought (albeit by today some things have progressed further) - I would suggest you listen to Episode 381 of Unchained by Laura Shin.
Laura Shin
I have no favourites in the game of merge; yet financially if one could profit from it then why not explore. The ETH merge is supposed to move the ETH chain to proof-of-stake. This is a hard fork; and therefore there will be a split. Similar to previous split that ETH went through years ago; that led to ETC; now you are bound to have at least 1 more proof-of-work chain that splits at the merge time.
To make things easier to understand lets declare some "tickers":
- ETH - is current pre-merge chain
- ETH2 - is proof-of-stake chain (some are already referring to it as ETHS; S for Staked)
- ETHW or ETHPOW - is proof-of-work chain post-merge
- ETC - is proof-of-work chain that actually is unaltered original Ethereum chain (inclusive of the DAO hack). Current ETH has an altered chain from this original one - alteration was the reversal of the hack.
When ETC/ETH split occurred in July of 2016; Vitalik & co learnt a valuable lesson (or so I hope). They were of blind belief that everyone (especially miners, exchanges, market makers, large holders of ETH aka whales) will obey the geek overlords and simply move over to the new chain. Yet, whenever money is at stake there will always be someone willing to bend the rules to make some profit. This same drama was seen during the block wars of BTC which led to BCH's birth.
Upon fork; there exists distinct & separate universes of ledger. If I held coins pre-fork; now post-fork I will hold coins in both ledgers. Yes; free money - yet in order to profit you need an off-ramp where you can sell whichever chain you are not interested in holding. Game theory plays a big role in how major players build narratives and which exchange they could convince into listing the coin. For instance, in 2017 I was too impatient and sold all my BCH upon the fork; however, if I had waited another week or so; then Coinbase's listing would have 4x-ed this free money. Indeed, as always future is unknown.
Now let's return to ETH drama. How to play this theoretically?
- buy spot ETH
- hedge this spot - probably long dated futures - (or wait till August 10/11 when September 19 date could be firmed up)
- ensure spot ETH is in a self-custody wallet - this is crucial because exchanges will play their own games (fork coins are not guaranteed like a share dividend to be distributed to you - so be careful)
- keep track of players & their flip-flopping antics.
- Chandler Guo (@ChandlerGuo)
- Justin Sun (@justinsuntron)
- he is apparently contemplating donating some of his rumoured 1.0m+ ETH coins to one of the proof-of-work forks
- he also owns Poloniex exchange that has just activated trading on future fork trading pairs
- Vitalik (@VitalikButerin)
- create google alerts on ETH, ETH2, ETHW, ETHPOW, ETC
- monitor twitter for same tags as google alerts
- upon merge news; decide which fork to dump & which to keep
After all, I am not the only one who is thinking in similar manner - so I am 60% of opinion that best outcome might well be to dump all forks (including the proof-of-stake) and just closely watch the narratives post-merge before deciding which to buy up for long term hold. Ideally, given that the group think & tribal wars within crypto-sphere are already very heated; I would say merge might well be peak Bitcoin hate period - hopefully some more cheap bitcoin will come to market than.
Lastly, there is too much noise again about MtGox coins being distributed to creditors after August. The most I can say on this topic is that I will be very surprised if something comes by December (even Fortress with its rumoured BlackRock backing was too optimistic of the distribution timings). Only slightly off-tangent change is the extradition of Alexander Vinnik to the US (from Greece) - again I highly doubt it will have material impact on MtGox trustee's estate. Yet, I hope it gives US a closure on Russian involvement & supposed funding of actions in Crimea.
