Many ETH owners are ditching DeFi liquidity pools for wallets relevant to the Ethereum mainnet. This has to do with the fact that ETH PoW is expected to emerge as an alternative to the Vitalik-backed Ethereum network after the Merge, Ethereum’s upcoming upgrade. People are eyeing the fork’s ETHW tokens and are looking forward to a potential ETHW airdrop.
A few days ago, Bobby Ong, the influential founder of CoinGecko, even put out a Twitter post that spelled out what users would need to do to benefit from such an airdrop.
The Ethereum Merge is scheduled to take place on 13 September. Christmas season is here again.
ETH holders will soon be airdropped ETH PoW tokens. What should you do to best position yourself?
Here are 7 steps you may consider to fully take advantage of the Merge:
— Bobby Ong (@bobbyong) September 5, 2022
Moving ETH held to a non-custodial wallet was his first suggestion. Unwrapping all wETH from DEXs and removing liquidity from DeFi protocols used to stake your ETH was another idea Ong offered. Ong also recommended borrowing ETH from the likes of Compound and AAVE. The borrowed ETH could be returned upon receiving the airdrop.
Why the ETHW airdrop is all the craze right now
Each ETHW token is expected to be valued at 2.5% of the ETH price at the time. ETH is currently holding steady at $1,666. So if the price of one ETH touches $2,000 post-Merge, an ETHW token will cost close to $50.
However, the final price of the Proof-of-Work token will depend on when the Merge actually takes place.
How is the airdrop news impacting the DeFi space?
Airdrop revelations have made people take out their staked and wrapped ETH from pools, Decentralized Exchanges (DEXs), and protocols. Plus, people are even borrowing ETH from the lending protocols and furthering the liquidity exodus.
However, protocols have started responding to this development. Aave has issued a governance proposal to pause pre-Merge ETH lending. Compound, on the other hand, has set a 1,00,000 ETH borrowing limit for now. Additionally, if the utilization reaches 100% (of the liquidity pool lent out), Compound will begin to charge 1,000% interest on the value lent.
