Ethereum, the blockchain behind the world’s second largest crypto asset of the same name, will almost certainly split, into two separate coins running on two different chains: Proof-of-Work (PoW) and Proof-of-Work (PoW) -of-stake (POS).
Such a split between members of the crypto community, often influenced by differing views, is called a ‘hard fork’. Or just ‘fork’. Some Ethereum miners, reluctant to get rid of the old consensus mechanism, have now hinted at plans to ‘fork’ the blockchain after it has been ‘merged’.
forking ethereum
“The series will split. Ethereum will continue on PoS as normal, and miners will fork it and create $ETHW.” tweeted Pseudonym DeFi Strategist Olympios.
This, Olympio explained, means that the entire Ethereum blockchain will have two identical instances – all Ether, ERC20 tokens and transactions, as well as all DeFi conditions existing in Proof-of-Work and Proof-of-Stake.
Users holding Ethereum prior to the merge can automatically receive the balance of new Proof-of-Work fork tokens in their wallets. The process for claiming these tokens will vary depending on the chain.
If the exchange decides to list those specific tokens, assets on a centralized exchange such as Poloniex or Coinbase are likely to receive forked tokens without much ado.
Olympios cautioned that while forked tokens can be bought or sold, “it’s probably unnecessary risk and probably not worth it.” He expects the PoW Ethereum forks to collapse right after the merge because “the miners promoting PoW Ethereum don’t seem to be very competent.”
Or you could fall victim to unexpected replays, he says.
What are replay attacks?
According to experts, a replay attack occurs when bad actors sneak over a secure network connection and intercept it, giving them delayed access or replaying another data transaction to remove the receiver. Are being given.
In terms of merges, replay attacks are a realistic possibility. “Transactions signed and submitted across the PoS and PoW chains will be identical and can be executed on both chains,” Web3 security firm Quantstamp Labs explained in a blog post.
This can have many consequences. Users can exchange their non-fungible tokens or ERC20 tokens on decentralized exchanges (DEXs) unnoticed to an attacker. Essentially, any transaction on Ethereum can be affected, it said.
For example, imagine you send 100 proof-of-stake Ether to sell to an exchange like Poloniex, Olympio says that a bot can send your 100 real ETH to the same Poloniex address on the Ethereum mainnet.
“In this particular example, what will happen is that the money may not be lost forever (since Poloniex has all the keys), but chaos and uncertainty will most likely be the result of the actual, tangible and significant miles completed that day. turning away from the stone [the Merge],” He said.
However, “attackers cannot freely withdraw assets from user accounts after a merge, without the users themselves creating suitable conditions for attackers.”
Quantstamp said it was an issue at the protocol level, “whether the account’s private keys are managed by a hot wallet (such as MetaMask), a hardware wallet, or a custody provider…”
How to avoid unexpected replays
“I would stay 100% away from ETH Proof-of-Work,” advised Olympio. However, for users who insist on interacting with PoW fork tokens, it is possible to protect against unintended replays.
Ensure that transactions signed on one chain (PoW or PoS) will naturally fail if replayed on the other chain. To do this, Quantstamp Labs suggests moving all assets on both chains to new accounts dedicated to those chains. This is the most effective method, it says.
Olympio told how.
“After the merge, send your ETH from your main wallet to another wallet on a Proof-of-Stake that you control. Now you send your Proof-of-Work Ether to Poloniex to dump. If someone sends it over PoS tries to play again, the transaction will fail because you have already transferred it to your other wallet.”
The transfer must take place on both PoW and PoS chains. “If it only happened on one chain, an attacker could replay the transfer on the other chain and carry out the attack in the same way,” Quantstamp said.
This exempted the use of nonce as a substantial fix for replay attacks. A non-one number is a sequence of transactions sent by an account on the Ethereum network. The first transaction from an account does not contain a 0. After that each transaction is incremented by 1, which means there can be no lag.
Proponents of non-divergence argue that if one chain carries the nonce to an account, the other chain will lag behind in the transaction sequence, and therefore, attempts to replay the transaction will fail because of the non-divergence. .
But “if the attacker is able to execute the transaction on the second chain and match the account nonlinearity, then it will be possible to replay,” Quantstamp said.
What would a fork mean for ETH on a layer two protocol?
“Nothing. All safe. Unaffected,” Olympios insisted.
A layer two (L2) is a separate blockchain that extends Ethereum – meaning it helps to scale the Ethereum blockchain by improving transaction speed and reducing transaction costs.
A total of over $5.1 billion worth of ETH is locked in the Layer Two protocol, according to data from the Ethereum Foundation website.
“Most L2s have a centralized component to them,” Brian Passfield, CTO of Fringe Finance, told Bee.[In]crypto.
“So I don’t think many people are considering the risks that could come from moving to PoS because it introduces an additional attack surface for authorities … which would result in transaction censorship,” he said. Told.
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