After the upgrade, Grayscale, the world’s largest digital asset manager, planned to review and decide whether to sell the old PoW system tokens. But in a recent report, the company said it is expanding its review.
In September 2022, the Ethereum blockchain network transitioned from its old proof-of-work system to the current proof-of-stake consensus mechanism. The move was necessary as the PoS consensus protocol does not consume a lot of power, but is more secure and valuable for implementing new scaling solutions.
Grayscale Expands ETHPoW Review
According to gray scale advertisement, the extension of the review will last 180 days. This will give the company enough time to decide how, when and whether to sell ETHPoW, the asset after the network merger in September 2022.
The asset manager cited environmental concerns around PoW, which is the high levels of power consumption to validate transactions, as a critical motivator for the review. In addition, the company is also concerned about the uncertainty of trading venues and custodians of crypto assets. He noted in the announcement that trading venues are not yet set for EthereumPoW tokens.
According to the report, the price of ETHPoW can fluctuate if the custodians of the crypto assets support the tokens or if there is a noticeable development in the trading markets.
Meanwhile, Grayscale’s review is a crucial step in PoS adoption, as the asset manager has a considerable amount of Ethereum in its Grayscale Ethereum Trust. Through the ETHPoW review, other major institutions may also reconsider their stance on the proof-of-work system.
Ethereum forks into two blockchains
The Ethereum network completed its merger in September 2022, a significant improvement. Post-merge, the network now operates on a PoS consensus algorithm, with notable differences from the old PoW.
However, some of the community members seemed to prefer the PoW model mining system. This resulted in the network forking into two blockchains: EthereumPoW and the main proof-of-stake network.
While ETHW can benefit community members who prefer to mine through the system, it is also challenging for digital asset companies that offer exposure only to Ethereum. This is particularly true as some investors may wish to get exposure to EthereumPoW.
Meanwhile, some companies are already contributing to the challenge by planning to provide a new ETP (exchange traded product) to facilitate investor exposure to EthereumW. However, given the uncertainty of its sustainability, the new ETP will serve as the backbone for the ETHW.
Meanwhile, the extension of the Grayscale review is seen as a positive step for ETH and the crypto industry as a whole. As the network continues to develop in its PoS system, the adoption of this consensus mechanism by major institutions like Grayscale will likely increase over time.
Featured image from Pixabay and graphic from Tradingview.com
