Is Civil War Brewing within Ethereum Community?

Key Takeaways:

  • Ethereum (ETH) is preparing to make a transition to Proof of Stake (PoS) in September
  • As the "Merge" update approaches, a civil war is brewing within the community
  • Influential Chinese miner Chandler Guo threatens to fork the network again
There is a Civil War Brewing within Ethereum Community led by Chinese miner Chandler Guo as the Network prepares for the "Merge" update
A civil War is brewing within the Ethereum community. Image by salesblog from Pixabay

YEREVAN ( —Ethereum (ETH) is now preparing to finally transition from proof of work (PoW) to proof of stake (PoS) through its “Merge” update. However, as the date approaches, a Civil War is brewing within the community. 

One group, led by influential Chinese miner Chandler Guo, is now advocating for a new fork in the network. The group is unhappy with the shift to POS and wants to have a POW version of the Ethereum network.

Chinese miner Chandler Guo is confident, that a new Ethereum fork will happen.
Chinese miner Chandler Guo is confident that a new Ethereum fork will happen. Credit: Twitter

Meanwhile, Ethereum co-founder Vitalik Buterin has claimed he sees no threat from those pushing for a merge. 

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Why is the “Merge” upgrade an issue? 

The Ethereum “merge,” which will upgrade the network to Ethereum 2.0, is likely to occur on September 19. As CoinChapter earlier reported, the transition will make the network more productive. In addition, it will lower Ethereum’s energy consumption while reducing the high transaction (gas) fees.  

While the community has welcomed the development, many giant miners are apprehensive of it. Under the Proof of Work (PoW) system, miners generate (mine) new ETH tokens by validating transactions on the network. For this, they use large computing power and expensive gadgets.

Civil war is clearly brewing with the Ethereum community.
Civil war is brewing with the Ethereum community. Credit: Twitter

However, following the upgrade, the network will no longer rely on miners. Instead, the community will stake their existing ETH tokens to validate transactions. 

Many ETH miners globally have invested tens of thousands of dollars on expensive equipment they use to mine ETH. The “merge” upgrade will deprive them of their income and render their gadgets useless.

As a result, Chandler Guo and his followers are now trying to preserve the network in its existing Proof of Work (PoW) form. 

Justin Sun supports Ethereum Proof Of Work (PoW)
Justin Sun supports Ethereum Proof Of Work (PoW). Credit: Twitter

Tron (TRX) founder Justin Sun has already endorsed the idea. He recently listed two new tokens on his Poloniex exchange to represent the potential forked tokens. 

Moreover, he pledged financial support to the community if the fork eventually came to pass.

Recommended: Ethereum futures predict a bad, bad 2022 for ETH price ahead

Ethereum POW fork plans might fall flat

While Guo is likely to drum up support for his new fork plans, it is unlikely to be enough to split the community. However, even if he successfully forces Buterin and Co. to initiate a division, a forked ETH token (whatever the name may be) will have little value. 

Creating a token is perhaps the easiest part. The bigger question is, what purpose will a POWER network serve?

The value of ETH lies in its utility. Over the years, the developers have created a large ecosystem, which gives the token an underlying market value today. In addition, several apps, marketplaces, and projects run on the Ethereum network, making ETH relevant and generating demand for it. 

Meanwhile, a new Ethereum Network must build the same ecosystem to make the fork worthwhile. Miners will only be interested in mining the new token if it makes economic sense. With no real value, it makes a POW Ethereum useless. 

One is not to say a new network cannot have all these. However, Guo will need a lot of financial and technical support. 

Moreover, Ethereum has already gone through a fork. As a result, a POW ETH network already exists- Ethereum Classic (ETC). As CoinChapter reported earlier, many miners are already looking to shift to ETC. This has helped the token rally from around $15 a month earlier to nearly $40 today, according to CoinMarketCap

Ethereum Classic (ETC) has surged over the news of the "Merge" update.
Ethereum Classic (ETC) has surged over the news of the “Merge” update. Credit: CoinMarketCap

Incidentally, Guo was also among those who forced ETH to split following a  major hack in 2016 ($50 million). 

With the Ethereum Classic already offering an alternative to Proof of Stake, what purpose will the new network serve? 

Buterin stays positive about the Ethereum upgrade

While Buterin acknowledges that the Ethereum network can undergo another fork event, he doesn’t see any reason to be concerned. On the contrary, he is convinced that most people have welcomed the news about the upgrade.

According to Buterin, those calling for a fork are only “a couple of outsiders that have exchanges and most just want to make a quick buck,” according to a report by Fortune.

Meantime, the Ethereum co-founder is convinced that upcoming layer-2 solutions will help make crypto payments cost-effective. As a result, more people can adopt crypto payments to bypass traditional institutions, which is one of the intended advantages of the industry. 

The high transaction fees, especially on the Ethereum network, greatly hinder its mass adoption.

“So today with roll ups, transaction fees are generally somewhere between $0.25, sometimes $0.10… The transaction costs could go down to $0.05, or even maybe as low as $0.02. So much cheaper, much more affordable, and a complete game changer,”

CoinTelegraph quoted Buterin saying at Korea Blockchain Week (KBW).

Recommended: Ethereum Classic (ETC) pumps 45% in three days on Merge FOMO — will the rally continue?

Ethereum receives $160M in inflows as  ETH price surges

According to a recent report by CoinShares, Ethereum saw inflows totaling $16 million and is enjoying a nearly seven consecutive week run of inflows totaling US$159m. We believe this turnaround in investor sentiment is due to greater clarity on the timing of The Merge.

According to a recent report by CoinShares, Ethereum has been attracting a lot of inflows in recent weeks. In the first week of August, it saw inflows of $16.3 million, bringing the net inflows to Ethereum over the last seven weeks to over $159 million. 

James Butterfield, Head of Research at CoinShares, attributes this spike to the upcoming network update.

“We believe this turn-around in investor sentiment is due to greater clarity on the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake,”

he noted. 

Meanwhile, ETH put up a strong performance in July following a  bumpy start to the year. Since July 12, the token has surged over 75%, jumping from $1,034 to $1.795 on August 8. 

Ethereum has surged in price since July as Civil War brews in the community.
Ethereum has surged in price since July as Civil War brews in the community. Credit: ETH/USD via TradingView

At the time of writing, the token trades for around $1722, with a total market cap of around 2010 $billion. 

With the Merge now fast approaching, the token will rally even further. Ethereum Classic (ETC) is set to benefit, thanks to the supporters of the Proof Of Work network. However, it is unclear if the miners will succeed in pushing for another fork. 

Civil War Brewing within Ethereum, Is Civil War Brewing within Ethereum Community?

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