March 27, 2024
Grayscale drops rights to Ethereum's post-merge proof-of-work tokens
Latest Cryptocurrency News

Grayscale Abandons Ethereum’s Post-Merge PoW Tokens Amid Liquidity Concerns

Cryptocurrency investment giant Grayscale has officially decided to relinquish all rights to Ethereum’s post-merge proof-of-work (PoW) tokens, known as ETHPoW. The announcement was made on September 18, as Grayscale stated that it had irrevocably abandoned these rights on behalf of the shareholders as of the record date for each product.

Grayscale’s decision follows a comprehensive evaluation in which they found that ETHPoW tokens had not achieved significant liquidity, and the custodian of the products did not support these tokens. Grayscale elaborated on this decision, explaining that it was impossible to exercise the rights to acquire and trade the ETHPoW tokens, prompting them to abandon these rights on behalf of the record date shareholders.

This move by Grayscale comes more than a year after the Ethereum Merge, which marked Ethereum’s complete transition from PoW to proof-of-stake (PoS). The merger took place on September 15, 2022, resulting in the split of the Ethereum blockchain into a primary PoS-based Ethereum and a secondary PoW-based Ethereum. Following the merger, Grayscale had been deliberating whether to acquire Ethereum PoW tokens and sell ETHW on behalf of the record-date shareholders. It took them an additional six months to reach a decision due to uncertainty surrounding the support for ETHW tokens from digital asset custodians and trading platforms.

In contrast to Grayscale, some cryptocurrency investment firms, such as ETC Group, had attempted to introduce dedicated exchange-traded products (ETPs) for EthereumPoW. However, ETC Group terminated its PoW-based ZETW ETP just six weeks after its launch, citing a lack of eligible custody providers.

Interestingly, Grayscale’s decision regarding ETHW came one day before the firm proposed the launch of a new Ether futures exchange-traded fund. Grayscale filed with the United States Securities and Exchange Commission to list and trade shares of the Grayscale Ethereum Futures Trust (ETH) ETF under the New York Stock Exchange Arca Rule 8.200-E on September 19.

Image by pixabay

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