The question must have arisen for you that after the Ethereum Merge, will your NFTs be safe and what will be the role of duplicate NFTs in the forked chains? As you know, in this Ethereum update, this network has moved from the Proof of Work (PoW) algorithm to the Proof of Stake (PoS). Therefore, this transition may bring changes to many assets, including Peerless Tokens. In this article, several developers and builders answer these questions about Impact of Ethereum on NFTs we pay Stay with the country of blockchain.
What is the impact of Ethereum on NFTs?
Ethereum Merge It was under investigation and development for years; But as the middle of September approaches and a little before Setting up Marj on the Ethereum mainnet, many users wondered what could go wrong and would anything change in relation to their assets? These concerns about implementation Ethereum integration update This is especially true of NFTs; Because the Ethereum blockchain is the market leading network for NFTs with several million unique tokens.
In general, we can say that don’t worry; Because your NFTs will still be in your wallet. However, as a result of the merger event, some duplicate NFTs will appear, potentially leading to confusion and fraud.
Update on the Ethereum platform Changed the Ethereum network consensus mechanism from Proof of Work to Proof of Stake. According to the Ethereum Foundation, the new consensus system is expected to consume more than 99% less energy. This is a huge step forward for Ethereum and for NFTs in particular, effectively negating one of the biggest criticisms associated with NFTs, energy consumption.
That being said, it’s been years since the Merge update was implemented, and Ethereum’s core developers have tested all the processes and looked for potential issues; However, there is no guarantee that this will happen without problems.
Ethereum is a software and all software suffers from the problem of “stroke”; In other words, it is not possible to determine with certainty whether technical problems will occur or not.
The stroke problem or Halting Problem in computing theory means the problem of software decision making. This means that the software asks that, given a computer program and an input, whether the program terminates or runs forever, in fact, the software cannot determine whether a program stops or runs forever, and this causes a stroke in The software works.
However, if all goes according to plan in the future as well, Ethereum NFTs Should work well on the PoS mainnet. They are still stored in your wallets and can be bought and sold in the markets as usual and you don’t have to do anything special.
Users should expect their NFTs to be securely deployed on the new Ethereum chain (with a proof-of-stake mechanism) along with Ethereum coins.
Concerns related to the impact of Ethereum Merge on NFTs
While most members of the Ethereum community seem to be on board with the merger and its potential benefits, the update has significant detractors. Some supporters of Ethereum do not want this blockchain to use a proof-of-stake consensus mechanism instead of proof-of-work; As a result, some creators in the Ethereum community prefer to fork this blockchain.
They have proposed to create a separate chain that will continue with the current consensus system of proof-of-work. The most prominent example to date is the ETHPOW fork led by famous Chinese miner Chandler Guo. ETHPOW is actually a proof-of-work fork of Ethereum. Of course, this fork also has problems that you can see in the following news
ETHPOW does not function like the Ethereum mainnet and is similar to the Ethereum fork in 2016, as a result of The DAO hack. At that time, some users remained on the previous chain known as Ethereum Classic with ETC coin.
As ETHPOW and any other forks separate from the main Ethereum network, they create duplicate versions of NFTs on the Ethereum network. A non-equivalent token is simply a token on the blockchain and can act as a document of ownership of digital items such as works of art and collectibles. Therefore, a forked Ethereum chain will have duplicate NFTs corresponding to the same artwork.
To better understand this, imagine that if an NFT market supports both the merged Ethereum mainnet and the desired proof-of-work fork, you might see both duplicate token versions listed on that market. This is sure to cause confusion and there may be scammers trying to sell duplicates of expensive NFTs like Bored Apes or Beeples to inexperienced users.
Jana Powell says about this:
If proof-of-work forks are successful and NFT markets support them, there will certainly be confusion and arbitrage opportunities in the market that we cannot really predict.
One can imagine professional NFT traders, buying valuable assets on the PoW chain at affordable prices and selling them on the proof-of-stake chain at a higher price to make a quick profit; While new traders may not know the difference.
Risk of Replay Attack
On the eve of the event Ethereum blockchain integration, there were talks about the possibility of a replay attack, and of course, as you read a little higher in the related news, this happened in the proof of work chain; A replay attack means that a transaction in a proof-of-work fork can later be replayed in the proof-of-stake network.
Imagine that the owner of one of the Castle Monkey NFTs might sell a duplicate of it on the proof-of-work chain; But if the same transaction was done by a fraudster in the Proof of Stake network (sold the same NFT in the PoS chain and did a replay attack), the owner will lose the original version of this NFT in that chain (PoW). will give. This could cause significant losses to some NFT collectors.
Marius Van Der Wijden One of the main developers of the Ethereum network told Decrypt:
A replay attack is only possible when the blockchains use the same Chain ID. Since the ETHPOW fork will have its own unique chain ID, it will not face the replay attack problem.
However, this claim may not apply to other proof-of-work chains that are separate from Ethereum. Powell offered simple advice for NFT holders to avoid any problems; But this means losing potential cash from the return of duplicate assets.
The best way to protect an asset from replay attacks is to not interact with the proof-of-work chain at all. If you don’t interact with the PoW chain, you don’t need to do anything and you won’t have to worry about replay attacks.
What do companies and platforms think about forked networks?
Either way, there will be duplicate NFTs due to the ETHPOW chain and other potential forks, possibly leading to some confusion as to which assets are official or original. When such a situation occurs, we may see the growth of NFT sales in the proof-of-work chain, and in this case, the prices of the proof-of-work chain NFTs will decrease rapidly. Of course, this may be a short-term event; Few in the Ethereum community believe that any proof-of-work blockchain fork will be a long-term effort with significant user support.
We may see NFTs sell quickly on the PoW chain, but there is little social sentiment about the value of these assets on the chain; Therefore, the demand for them will also be low. Prices for duplicate assets are likely to be a fraction of the price of popular projects, and even then, the prices of Proof-of-Work Chain NFTs will drop quickly.
Eric Diep, co-founder of Manifold, said:
There is a high probability that the proof-of-work chain will only result in a shadow of the new proof-of-stake chain, and the amount of value that can be mined will decrease significantly over time.
However, project creators and marketplaces can only consider Ethereum mainnet (PoS) NFTs as legitimate and forked copies as unofficial. For example, Yuga Labs, creator of Bored Ape Yacht Club (and now Owner of CryptoPunks), confirmed on August 18 (27 August 1401) that only people who have NFTs of this collection in the proof-of-stake chain will be eligible for the benefits of this community. That is, the Castle Monkeys collection has officially announced that the NFTs of this collection are only valid in the Proof of Stake chain.
Startup Proof, creator of NFT project Moonbirds, has the same opinion. Angharad “Harri” Thomas The product manager of Proof said on September 2 (11 Shahrivar 1401) and before Marj:
Once the Ethereum integration is successful, Proof will follow the broader Ethereum community in recognizing the new Proof of Stake chain and its NFTs. Any fork with a proof-of-work mechanism that after Ethereum integration created, will not be recognized.
Leading marketplace OpenSea, which owns a significant portion of the Ethereum network’s NFTs, also said it would only support proof-of-stake chain. By refusing to list NFT assets on Ethereum’s forked proof-of-work chains, the OpenC platform may be able to save a significant number of collectors from the confusion and fraud of duplicate NFTs.
In general, it can be said that Ethereum developers believe that NFTs will function as normal after the Ethereum fork is updated, and that whatever happens to non-coin tokens on forked chains will be short-lived. So Impact of Ethereum on NFTs It will not be so destructive; However, there is no guarantee that everything will go according to plan. Technical problems with the integration update may lead to confusion and fraud. The best strategy for NFT collectors is to avoid high-risk transactions for the time being and wait until potential problems are resolved. Do you think NFTs minted on the proof-of-work chain could cause their price to drop on the main chain? Will forked networks last?