The Ethereum Merge is just days away, and with it comes a pivotal shift in blockchain history: the transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This upgrade not only marks a greener, more scalable future for Ethereum but also opens a unique opportunity for retail investors — potential airdrops of ETH PoW tokens from forked chains.
If you're holding ETH, now is the time to act. Whether you're a long-term holder, DeFi participant, or speculative trader, understanding how to position yourself before the Merge can significantly impact your returns. Below is a step-by-step guide to help you maximize your eligibility and benefits during this critical period.
What’s Happening During the Ethereum Merge?
Ethereum is upgrading its consensus mechanism from energy-intensive mining (PoW) to staking-based validation (PoS). Once complete, miners will no longer be able to validate transactions on the main Ethereum chain. However, some miners plan to continue supporting a PoW version of Ethereum by forking the network — similar to what happened with Bitcoin Cash in 2017.
These forks may result in new tokens, such as ETHW (Ethereum PoW), distributed via airdrop to users who held ETH at the time of the fork. To qualify, you must meet specific conditions before the Merge finalizes.
Let’s explore seven strategic steps to ensure you’re positioned correctly.
1. Hold ETH in a Non-Custodial Wallet
To receive any potential ETH PoW airdrop, you must hold ETH in a non-custodial wallet — ideally a hardware wallet like Ledger or Trezor.
Why? Because exchanges are custodial platforms; they control your private keys. If your exchange doesn’t support the fork or decide not to distribute forked tokens, you won’t receive them. Even if they do support it, distribution could take weeks or months.
👉 Secure your ETH now and take full control of your assets with a self-custody solution.
While some major platforms may support the fork, relying on them introduces risk and delays. For maximum control and immediate access to new tokens, self-custody is your best bet.
2. Move All ETH from Layer 2 Networks to Mainnet
Assets held on Layer 2 networks like Optimism, Arbitrum, Polygon, or Avalanche will not be eligible for the airdrop unless moved back to the Ethereum mainnet before the Merge.
Forked chains typically use the Ethereum mainnet ledger for snapshotting. Any ETH balance recorded off-mainnet won’t appear on the PoW fork’s blockchain.
Action Step: Transfer all your L2-held ETH to an Ethereum mainnet wallet before the Merge. Be mindful of gas fees and network congestion — plan accordingly.
3. Convert WETH Back to ETH
Wrapped Ether (WETH) is used across DeFi platforms for compatibility, but during a hard fork, only native ETH balances are recognized.
There’s no guarantee that WETH will be automatically unwrapped or supported on the new PoW chain. While decentralized exchanges (DEXs) might emerge post-fork to handle conversions, relying on an unstable, nascent ecosystem is risky.
👉 Ensure you’re holding pure ETH — avoid complications from wrapped assets during the fork.
Best Practice: Unwrap all WETH into ETH well before the Merge. This ensures your holdings are directly eligible for any airdropped tokens.
4. Withdraw Liquidity from DeFi Protocols
If your ETH is deposited in liquidity pools on platforms like Uniswap, Curve, or Balancer, you likely won’t qualify for the airdrop. The snapshot is taken at the wallet address level — not within smart contracts.
When you provide liquidity, your ETH is locked in protocol-owned contracts, which means it won't appear as part of your personal balance during the snapshot.
Recommended Strategy:
- Temporarily withdraw your liquidity before the Merge
- Re-deposit after the fork event concludes
- Monitor protocol updates for potential disruptions
As many users do this simultaneously, expect temporary liquidity crunches in popular DeFi pools around the Merge window.
5. Borrow ETH on Aave or Compound
Here’s where things get strategic: you can borrow ETH against your existing collateral and increase your total holdings before the snapshot.
Since eligibility is based on wallet balance at fork time, borrowing ETH increases your claimable amount of potential PoW tokens. Even though you owe the borrowed ETH later, you still receive the airdrop on the full balance.
For example:
- You hold 10 ETH
- You borrow an additional 5 ETH using other collateral
- At snapshot: 15 ETH in wallet → 15x claim on PoW tokens
Keep in mind: demand for borrowing may spike, pushing utilization rates toward 100%. Check Aave and Compound rates early and act fast.
6. Watch the stETH/ETH Market Closely
Staked ETH (stETH) has been trading at a slight discount due to merge uncertainty. As the event nears, expect increased volatility.
Many stakers may choose to unstake or sell stETH for liquid ETH to participate in the PoW airdrop. This could trigger short-term selling pressure on stETH.
Opportunity?
- Buy stETH when prices dip due to panic selling
- Sell after the Merge stabilizes and confidence returns
- Or simply convert stETH to ETH early if you want airdrop eligibility
Track price trends and sentiment closely — timing matters.
7. Buy the Rumor, Sell the News
Markets often price in expectations before events occur. Currently, IOU markets (where futures for potential PoW tokens trade) value ETHW at about 2.8% of ETH’s price.
Historically, forked tokens see a brief spike post-launch — driven by speculation — followed by a steep decline as miners dump and interest fades.
Consider this strategy:
- Position yourself before the Merge
- Claim your airdropped tokens immediately
- Sell early to lock in profits
Most PoW forks lack long-term utility or community backing. Selling at launch avoids holding depreciating assets.
Frequently Asked Questions (FAQ)
Q: Do I need to do anything if I hold ETH on an exchange?
A: Yes — check whether your exchange supports the ETH PoW fork. If unsure, withdraw to a personal wallet to ensure eligibility.
Q: Will every Ethereum fork give me free tokens?
A: Not necessarily. Only chains that successfully fork and distribute tokens based on the snapshot will issue airdrops. Beware of scams claiming otherwise.
Q: Can I lose money participating in the fork?
A: Direct losses are unlikely if you manage keys securely. However, holding forked tokens long-term often leads to depreciation. Most drop significantly within weeks.
Q: Is there more than one Ethereum PoW fork expected?
A: Possibly. Multiple groups may attempt forks, leading to several competing chains. Only one or two may gain traction; others will likely fade quickly.
Q: When exactly should I move my ETH?
A: Complete all transfers at least 24–48 hours before the expected Merge time to avoid gas spikes and delays.
Q: Are these strategies guaranteed to work?
A: No. The crypto space is unpredictable. Always do your own research (DYOR) and never invest more than you can afford to lose.
Final Thoughts
The Ethereum Merge represents both technological evolution and financial opportunity. While the primary chain moves toward sustainability and scalability, the emergence of PoW forks offers short-term gains for informed participants.
Your best approach combines technical preparation — moving funds, unwrapping tokens, exiting DeFi — with strategic positioning, including borrowing and market timing.
But remember: most forked tokens fail over time. Their sole purpose is often to keep miners active temporarily. Treat them as speculative assets, not long-term investments.
As history shows — from Bitcoin Cash to Ethereum Classic — few forks survive beyond initial hype. Take advantage of the moment, but exit wisely.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research before making any investment decisions.
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