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Security Issues With Ethereum PoW, According to DeFi Giant Supporting Merge

10-Sep-2022 By: Simran Mishra
Security Issues With

On Friday, Maker, a DeFi lending and borrowing protocol, 

Announced that following the Merge, the Maker Protocol would continue to use the Ethereum PoS blockchain. 

Using the Maker Protocol, Dai, or MKR on any Ethereum PoW hard fork exposes users to replay assaults, according to the DeFi giant.

MakerDAO Rejects PoW Chain and Supports Ethereum PoS Chain

On September 9, MakerDAO announced support for the Ethereum PoS blockchain following the Merge in a series of tweets. Additionally, the DeFi behemoth will keep working on the Ethereum PoS chain and will not support any Ethereum hard forks.

Maker Vault and Dai can remain on the Ethereum PoS blockchain without any user activity or update. According to estimates, The Merge will happen on September 14 or 15. Following the integration of the Beacon Chain and Ethereum Mainnet (PoW), proof-of-stake (PoS) consensus will be used. As a result, validators will process the blocks rather than miners. To continue mining Ethereum coins, some miners and businesses suggested an Ethereum PoW hard fork. Miners will produce ETHW coins as the hard fork, according to EthereumPoW, is unavoidable.

Users may be vulnerable to replay attacks if they interact with the Maker Protocol, Dai, or MKR on any Ethereum PoW fork, according to Maker. A replay attack allows a hacker to duplicate a transaction and execute it to withdraw money without authorization. The safe choice is the PoS.

However, the EIP-155 was implemented to defend against network replay attacks. Replay attacks could reappear if the chainId remains 1 and does not change on the PoW fork. Users who use the PoW chain risk losing their Dai and MKR.

DeFi Platforms Rejected Ethereum PoW Support

Aave, Uniswap, Lido, and other DeFi platforms have declined to support any Ethereum PoW hard fork. In fact, the EthereumPoW hard fork scheme has a number of security flaws that DeFi platforms have identified.

In the meantime, support for the PoS blockchain is increasing along with prices due to the hype surrounding the Merge. Over 6% growth has occurred in the last day in the price of Ethereum (ETH), which is currently trading at $1694.