How To Benefit from The Ethereum Merge

The Ethereum merge which moves Ethereum from the proof-of-work to proof-of-stake consensus protocol is scheduled for September 13. PoW ETH will be airdropped to holders of the token and here are some of the steps that holders should take to benefit from the airdrop.

A Compatible ETH Wallet

1) The first step to benefit from an airdrop such as the upcoming merge is keeping your tokens in a compatible wallet.

2) Hardware wallets generally support airdrops and coins from hard forks. An alternative is keeping your ETH tokens in an exchange that supports the airdrop. Not every exchange does, so be sure to check the updates from the exchange where your coins are stored to be sure that they support the upcoming airdrop from the Ethereum Merge.

Exchanges May Not Credit Airdroppped Tokens Immediately

3) Depending on exchanges for your airdropped ETH has a singular disadvantage being that they may not credit your airdropped ETH as early as you need them. This is why controlling your ETH in a supported wallet is a quick way of having access to them immediately.

Move ETH From L2 Networks

4) Leaving your ether on an L2 blockchain makes it impossible for you to get the benefit of an airdrop. This is why all coins in L2 protocols should be bridged back to the Ethereum mainnet. PoW ETH won’t be available for ether held in Polygon, Arbitrum, Optimism, Avalanche or other scaling blockchain for Ethereum.

5) Wrapped ether (wETH) won’t have ETH airdropped for them. According to Bobby Ong, the COO of CoinGecko,

“There will most likely be a DEX on the new ETH PoW chain to help you unwrap your WETH PoW token but why bother searching for it in a new unstable ecosystem? Just unwrap it before the Merge. The best alpha is to get hold of the ETH PoW tokens immediately”

6) ETH locked up in defi protocols won’t be airdropped ETH tokens. The best strategy is, withdraw the ether from the liquidity protocols and lock them back after the merge.

Borrow Some ETH

7) Borrow ETH from lenders such as Compound and Aave. This will ensure that the ETH held during the snapshot is substantial to give the holder more airdropped tokens at the Merge. However, to do this, you should hold other coins such as BTC to use as collateral.

8) Ong advises that investors monitor staked ETH.

“You could either buy or sell stETH as we get closer to the Merge depending on what others are doing. Would expect some to sell stETH to ETH to get the PoW airdrop. But if selling become too strong, you could buy stETH on the cheap.”

On a final note, speculating on the movement of the price of ETH may not be of much help since many people hoping to benefit from the airdrop would buy as much as they can afford and dump after the merge.


Author: Kamma

Kamma is passionate about the prospects of blockchain and the freedom cryptocurrencies afford people across borders. He holds small amounts of bitcoin and tether.

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