Grayscale Abandons Claims to Ethereum's Post-Merge PoW Tokens Citing Lack of Liquidity
Summary:
Cryptocurrency investment heavyweight Grayscale revealed its decision to forgo all claims to post-Merge proof-of-work (PoW) Ethereum tokens (ETHPoW), citing a lack of liquidity and support from product custodians. This comes a year following Ethereum's full transition to proof-of-stake (PoS), which resulted in the Ethereum blockchain splitting into PoS-based Ether and minor PoW-based EthereumPoW. While Grayscale deliberated extensively on acquiring EthereumPoW, other firms attempted to launch dedicated EthereumPoW exchange-traded products, but faced challenges due to the absence of secure custody providers. The announcement also preceded a Wall Street Journal report on Grayscale's intent to launch an Ether futures exchange-traded fund.
Grayscale, a leading player in the cryptocurrency investment arena, has entered into a final resolution to relinquish any entitlements it held to post-Merge proof-of-work (PoW) tokens of Ethereum, known as ETHPoW. This decision was communicated to the public on the 18th of September, with Grayscale clarifying that they've permanently forsaken all claims to ETHPoW tokens acting in favor of each product's record date shareholders.
Upon conducting an exhaustive investigation, the firm came to the conclusion that ETHPoW tokens lacked significant liquidity, and also weren't supported by the products' custodian. In a written statement, Grayscale pointed out that the impracticability of exercising the rights to purchase and dispose of ETHPoW tokens led to the final decision of forfeiting all claims to these assets.
Grayscale's move to forgo any rights to ETHPoW tokens was made a considerable time after Ethereum's transition from PoW to proof-of-stake (PoS) - an occurrence informally known as 'the Merge', which happened on 15th September, 2022. This transition split the Ethereum blockchain into the main PoS-based Ether (ETH) and minor PoW-based EthereumPoW (ETHW) tokens.
Post-Merge, Grayscale spent considerable time deliberating about whether to acquire EthereumPoW and offload ETHW on behalf of the record date shareholders. The firm spent half a year following the Merge, and another six months deciding whether to acquire the PoW tokens, due to various uncertainties regarding the support of ETHW tokens by digital asset custodians and trading platforms.
While Grayscale was hesitant, other cryptocurrency investment firms, such as ETC Group attempted to initiate dedicated EthereumPoW exchange-traded products (ETPs). Despite these efforts, the absence of secure custody providers led ETC Group to terminate its PoW-based ZETW ETP, a mere six weeks after its initiation.
The public announcement of Grayscale's resolution regarding ETHW was shortly followed by The Wall Street Journal's report on the firm's intentions to launch a novel Ether futures exchange-traded fund, as per a submission to the Securities and Exchange Commission. It is worth noting that Cointelegraph hasn't been able to trace this submission online and Grayscale neglected to immediately respond to Cointelegraph's request for commentary.
Published At
9/20/2023 10:20:38 AM
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