ETHW

Most recent update: [June 26, 2023]

What Is EthereumPoW? 

EthereumPoW is the predecessor to Ethereum, the second-largest and second most popular cryptocurrency after Bitcoin. Founded in 2015, EthereumPoW is described as a blockchain-based, open-source, and decentralized platform. The EthereumPoW blockchain supports ETHW, once the second-largest cryptocurrency by market capitalization before its transition to Proof-of-Stake. EthereumPoW functions just like other cryptocurrencies and is used by users of the blockchain to send or receive value without intermediary involvement, however, EthereumPoW is more than just a means to send or receive value.  

EthereumPoW also supports decentralized applications (dApps), smart contracts and is at the forefront of DeFi, allowing developers to create, test and deploy smart contracts on the EthereumPoW blockchain. The protocol ensures decentralization through the use of nodes spread around the world, these nodes replace central servers, and it also ensures that the EthereumPoW protocol is always online.  

Key Highlights in the History of EthereumPoW 

• November 2013 - Vitalik Buterin publishes the Ethereum whitepaper.  
• January 2014 - Ethereum’s founders publicly announce the development of the Ethereum platform. The development team consisted of Vitalik Buterin, Anthony Di Lorio, Mihai Alisie, and Charles Hoskinson.  
• August 2014 - Ethereum Concludes their ICO, having raised a total of $18.4 Million  

• May 2015 - Ethereum releases the “Olympic” Testnet  
• July 2015 - Ethereum releases Frontier, the first stage of Ethereum’s development  
• March 2016 - Ethereum releases its first stable release. Homestead.  
• June 2016 - The DAO Attack results in $40 Million worth of Ether is stolen.  
• October 2016 - Ethereum undergoes a hard fork after disagreements in the aftermath of the DAO attack. Ethereum Classic is created.  

• October 2017 - Ethereum initiates the Metropolis Byzantium hard fork.  
• February 2019 - Ethereum initiates the Metropolis Constantinople hard fork.  
• September 2022 – Ethereum migrates to Proof-of-Stake, thereby splitting the network into EthereumPoW, which relies on Proof-of-Work, and Ethereum, which relies on Proof-of-Stake.

The EthereumPoW Virtual Machine 

The EthereumPoW Virtual Machine or EVM is a quasi-Turing complete machine, a machine is considered Turing complete when it is mathematically able to solve any problem presented to it. Gas limits the EVM’s calculations which makes the EVM only quasi-Turing, It is at the heart of EthereumPoW’s ecosystem, handling the deployment and the execution of smart contracts. While simple transactions can function just fine without the EVM, all other operations require a state update by the EthereumPoW Virtual Machine. It contains millions of executable objects, with each object having its data store, the EVM also consists of several data components.  

• Permanent storage that is part of the EthereumPoW State  
• Volatile memory that is initialized to zero  
• An immutable program code ROM 

EthereumPoW Smart Contracts 

EthereumPoW smart contracts run the Ethereum ecosystem. Smart contracts are lines of code that reside on the EthereumPoW blockchain and make it possible to set certain conditions under which a transaction or any other action can automatically occur when the pre-defined conditions coded into the smart contract are fulfilled. Smart contracts cut out the middlemen or intermediaries that are usually present during an agreement or a transaction. These contracts work just like how a standard contract would, except without the presence of an intermediary.  

The EthereumPoW Blockchain 

The EthereumPoW blockchain stores the history and details of all the transactions and smart contracts on the Ethereum network, acting as a public ledger. Anyone who wishes to verify details can do so by accessing the blockchain. Volunteers worldwide have a copy of the EthereumPoW blockchain stored with them, ensuring the decentralization of EthereumPoW, these volunteers are also known as nodes. When a smart contract is initiated, this network of nodes, which comprises thousands of computers, ensures that the user follows the rules while executing the smart contract. EthereumPoW nodes also store the state of each smart contract, ensuring that all information, such as the smart contract code, user balance, etc., are all up to date.  

Proof-of-Work 

EthereumPoW uses a Proof-of-Work consensus mechanism and utilizes cryptography to secure and verify transactions. Miners on the EthereumPoW network solve complex mathematical problems that validate and confirm transactions on the network. Authorized transactions are added to the blockchain. For their efforts and computational power, miners are rewarded with newly mined ETHW tokens. With Ethereum 2.0, we will see EthereumPoW transition from a Proof-of-Work blockchain to a Proof-of-Stake blockchain.  

EthereumPoW works on a blockchain which is a decentralized public ledger that stores all transactions and processes that have taken place on the EthereumPoW blockchain, since the blockchain is decentralized, it is free of any central authority influencing it. Instead, it is maintained by the community. The blockchain uses cryptography to secure transactions, while miners validate the transactions and add them to the blockchain. 

EthereumPoW runs a computer known as the EthereumPoW Virtual Machine, with every node on the network keeping a copy of the EVM. All transactions are stored within blocks on the blockchain, with miners verifying the blocks before adding them to the blockchain. As mentioned earlier, EthereumPoW uses a Proof-of-Work consensus mechanism, and miners must commit their computing power to identify the unique code that identifies each block, with miners rewarded with ETHW tokens for their efforts. Each transaction has a fee attached to it, known as “gas” fees which have to be paid by the user to initiate a transaction.  

History of EthereumPoW 

EthereumPoW has become one of the most recognizable platforms in the crypto space and was the second-largest cryptocurrency by market capitalization, second only to Bitcoin, prior to its migration to Proof-of-Stake. The platform was founded in 2015 by Vitalik Buterin, however, it was first described in 2013 when the EthereumPoW whitepaper was launched. EthereumPoW’s ICO concluded in 2014 with the platform raising $18.4 million during their ICO.  

EthereumPoW has eight co-founders in total, with Vitalik Buterin and Gavin Wood the two most essential co-founders. Vitalik Buterin is the most well-known of the founders, and it was he who authored the EthereumPoW whitepaper. Buterin is still actively involved with EthereumPoW. After Buterin, Gavin Wood is the second most important individual in EthereumPoW. It was Gavin who coded the first implementation of EthereumPoW in C++, he was also behind proposing Solidity as Ethereum’s programming language and was the first CTO of the Ethereum foundation. Wood later moved on to the Web3 Foundation.  

Other co-founders of EthereumPoW are Anthony Di Lorio, Charles Hoskinson, who later found Cardano, Mihai Elisie, Joseph Lubin, and Amir Chetrit.  

What Makes EthereumPoW Unique? 

EthereumPoW has been at the forefront of creating a blockchain-based smart contract platform. Smart contracts are programs that are automatically executed when pre-defined criteria that have been coded in them are met, fulfilling a contract between two parties. Smart contracts remove the need for an intermediary reducing transaction costs and transaction reliability. EthereumPoW can execute smart contracts on the blockchain, further enhancing the benefits of the contracts. Apart from smart contracts, EthereumPoW can also use its ERC-20 compatibility standard to host other cryptocurrencies on its blockchain, this interoperability has been the most common use of EthereumPoW.  

• Smart Contracts - As mentioned earlier, smart contracts allow an agreement between two parties without the need for an intermediary. Smart contracts are immutable, which means that once they are executed, no party can alter them. The contracts are free of any interruptions, and any third party involvement, leaving the parties involved in the agreement or transaction in complete control. They also offer better security by keeping all information only between the parties involved in the transaction.  
• EthereumPoW Virtual Machine (EVM) - The EthereumPoW Virtual Machine is at the heart of EthereumPoW’s ecosystem, allowing for the deployment and execution of smart contracts. Smart contract executions need a state update by the EVM.  

EthereumPoW also guarantees decentralization and anonymity when users carry out their transactions.  

How Does EthereumPoW Work? 

EthereumPoW is similar to Bitcoin in its functions, existing on thousands of computers around the world. It relies on users known as “nodes” instead of relying on a centralized server. This makes EthereumPoW highly decentralized and nearly immune to any attack. It also ensures that the network is online 24/7. Even if part of the network went down, it would not affect the network because there would be thousands of other nodes running the network. At the heart of the EthereumPoW network is the EthereumPoW Virtual Machine. Every node on the EthereumPoW network maintains a copy of the EVM. All copies of the EVM must be updated for transactions on the network to be verified.  

Transactions on the network are stored in blocks, and miners work to validate the blocks before adding them to the EthereumPoW blockchain. The EthereumPoW blockchain uses a Proof-of-Work consensus mechanism, which means miners have to use their computational power to solve complex mathematical problems and verify transactions, For their efforts, miners are rewarded with newly minted ETHW.  

EthereumPoW Supply Model 

As of July 2021, there are more than 116,878,144.69 ETH in circulation. 72 million ETHW were issued in Ethereum’s genesis block, out of which 60 million were allotted to the contributors of the ICO held in 2014, and the remaining 12 million were issued to the development fund. The ETHW generated after this number was all generated through block rewards given to miners on the EthereumPoW network. In 2015, the reward was 5 ETHW, which was lowered to 3 ETHW in 2017, currently, the reward stands at 2 ETHW.  

Unlike Bitcoin, EthereumPoW’s total supply is not capped, instead the network adjusts the issuance of new tokens through consensus.  

How Is the Network Secured 

EthereumPoW uses a Proof-of-Work consensus to secure its network. In September 2022, EthereumPoW switched to a Proof-of-Stake consensus mechanism known as Ethereum 2.0. With the introduction of the Beacon Chain, it became possible to stake on Ethereum 2.0. As a validator, you stake your ETH on Ethereum 2.0 by sending the ETH to a deposit contract and securing the network.  

EthereumPoW Use Cases 

EthereumPoW is more than just a cryptocurrency and has several use cases.  

NFTs 

NFTs are digital tokens based on EthereumPoW, each NFT is a unique asset and has its identifying information stored on smart contracts. Because NFTs are unique, you cannot change one NFT for another, making them different from fungible items such a Bitcoin. NFTs are also not divisible, meaning you cannot send a part of an NFT to anyone. On EthereumPoW, NFTs utilize two types of token standards, the ERC-721, and the ERC-1155 token.  

Decentralized Finance 

Decentralized Finance or DeFi is the newest innovation on EthereumPoW. It is turning traditional finance and traditional financial services on its head by adding censorship-resistant and decentralized features to existing financial products and services and create new financial products.   

EthereumPoW Risks 

While EthereumPoW is one of the most popular projects in the crypto space, it does have its share of problems and risks.  

The Attack On The DAO 

The DAO or Decentralized Autonomous Organization was a smart contract hedge fund created to fund decentralized apps on EthereumPoW. It allowed users on EthereumPoW to choose which dApps would get funding. Now, if you wanted to exit from the DAO, you could do so through an exit door known as the split function. The split function returned the Ether invested and gave an option to create a child DAO. The split function exposed a vulnerability that allowed the DAO to be hacked.  

As mentioned earlier, the loophole exposed a vulnerability in the DAO, which allowed a hacker to create a recursive function and make repeated requests for the same DAO tokens. A total of $50 million was stolen by the attacker and sent the EthereumPoW community into pandemonium. This attack led to the hard fork that resulted in Ethereum Classic.  

The Resulting Hard Fork

While EthereumPoW has undergone several planned forks, the aftermath of the attack on the DAO was a chaotic time for the platform, it resulted in significant differences within the EthereumPoW community. A majority of the members proposed a hard fork that would mitigate the impact of the DAO attack. In contrast, some members of the community wanted to stick with the original blockchain, eventually, a hard fork was initiated, with a large number of the community moving to the new blockchain while a section of the community decided to remain with the original blockchain, which took the name Ethereum Classic.  

Due Diligence 

Prior to listing EthereumPoW on the VirgoCX Platform, VirgoCX performed due diligence on EthereumPoW and determined that EthereumPoW is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis including reviewing publicly available information on the following:  

• The creation, governance, and location of EthereumPoW and/or its primary development team; 

• The supply, demand, maturity and liquidity of EthereumPoW; and 
• Legal and regulatory risks associated with EthereumPoW.  

Statutory Rights under Securities Legislation

VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30, 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada, do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.