Grayscale, a major cryptocurrency investment firm, has made the decision to abandon all rights to post-Merge proof-of-work (PoW) Ethereum tokens (ETHPoW). The announcement was made on September 18th, with Grayscale stating that they have “irrevocably abandoned” all rights to the ETHPoW tokens on behalf of the record date shareholders of each product.
The decision to abandon the rights to ETHPoW tokens was made after a thorough review by Grayscale. They concluded that these tokens have not developed meaningful liquidity, and the custodian of the products does not support them. In their official statement, Grayscale explained, “As such, it is not possible to exercise the rights to acquire and sell the ETHPoW tokens, and on behalf of the record date shareholders, Grayscale is abandoning the rights to these assets.”
This decision by Grayscale comes more than a year after the Ethereum Merge event, which marked Ethereum’s full transition from PoW to proof-of-stake (PoS). The Merge occurred on September 15th, 2022, and resulted in the Ethereum blockchain splitting into main PoS-based Ethereum and minor PoW-based Ethereum.
In the aftermath of the Merge, Grayscale was considering whether to acquire EthereumPoW and sell ETHW on behalf of the record date shareholders. However, they took an additional six months to make a decision due to uncertainty surrounding the support of ETHW tokens by digital asset custodians and trading venues.
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It is worth noting that some cryptocurrency investment firms, such as ETC Group, attempted to launch dedicated EthereumPoW exchange-traded products (ETPs). However, ETC Group terminated its PoW-based ZETW ETP just six weeks after its launch due to the lack of eligible custody providers.
Grayscale’s decision to abandon the rights to ETHPoW tokens came just one day before their proposal to launch a new Ether (ETH) futures exchange-traded fund (ETF). They 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 19th.
This move by Grayscale showcases the constantly evolving nature of the cryptocurrency market. As new technologies and upgrades are introduced, investment firms must adapt and make strategic decisions to ensure the best outcomes for their shareholders. It also highlights the importance of liquidity in the cryptocurrency space, as tokens that do not develop meaningful liquidity may not be viable investment options.
Furthermore, the decision to abandon the rights to ETHPoW tokens raises questions about the future of proof-of-work tokens in a proof-of-stake dominated Ethereum ecosystem. With Ethereum’s transition to PoS, it is possible that PoW-based tokens may become less relevant and valuable over time.
Overall, Grayscale’s decision to abandon the rights to post-Merge proof-of-work Ethereum tokens reflects the company’s commitment to evaluating and adapting their investment strategies in response to market changes. As the cryptocurrency industry continues to evolve, it will be interesting to see how other investment firms navigate the shifting landscape and adjust their offerings accordingly.
