7 Possible Risks If Ethereum Is Forked
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Loading... - lewis maya
- 17 Aug 2022
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Futures contracts with a delay in selling and a negative funding rate
According to the protocol, the first risks they face are put-off futures and negative funding rates.
In this case, while holders of spot ETH will receive fork PoW tokens, those exposed to ETH perpetual and quarterly futures will not. If this happens, it could reduce the cost of leverage through futures contracts, creating competitive pressure on Maker vaults.
stETH Discount
Ethereum PoW hard fork after Merge could lead to stETH price drop as staked coins are likely to become worthless. ETH once staked will be locked and is expected to be opened after the network upgrade to Ethereum 2.0.
But with the PoW hard fork, these staked coins will become worthless as they remain locked until the network upgrade is completed.
External assets
The Ethereum fork poses a challenge to external assets operating on the network. The fork will force centralized stablecoin issuers, cross-chain bridges, and others to choose a PoW or PoS chain.
While some projects like Chainlink have expressed support for Merge, it is likely that others will accept the ETH fork, based on how much traction they have achieved recently.
Such actions could render assets connected to or taken from Ethereum worthless. At the same time, any protocol that accepts that asset as collateral could have serious liquidity problems. Read More…
