Justin Sun’s Plot to Divide Ethereum Off to Rocky Start

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  • “Justin Sun wants to sow dis­sent, con­fu­sion and FUD in order for him to ben­e­fit finan­cial­ly,” one for­mer ETH Foun­da­tion mem­ber said
  • Low trade vol­umes and sink­ing prices have set Poloniex’s Ethereum fork tokens on a rocky path 

Fig­ures around cryp­to have eye-rolled at recent inter­est in a proof-of-work (PoW) Ethereum hard fork ahead of the blockchain’s Merge to proof-of-stake (PoS). Not Justin Sun.

The promi­nent — and deep-pock­et­ed — fig­ure stands defi­ant­ly in sup­port of a long-last­ing Ethereum blockchain pow­ered by PoW.

Sun, the flam­boy­ant founder of the Tron net­work, is wag­ing a media cam­paign in sup­port of a con­tentious Ethereum hard fork.

On Mon­day, Sun list­ed an IOU token rep­re­sen­ta­tive of an even­tu­al PoW-pow­ered ether, ETHW, on his Poloniex exchange, despite the Merge still being about a month away. Cur­rent ETH hold­ers can deposit their real ether onto Poloniex and receive ETHW and anoth­er token, ETHS, the lat­ter denot­ed as PoS-pow­ered ether.

Justin Sun, Tron founder and Bit­Tor­rent CEO

Sun float­ed the pos­si­bil­i­ty of air­drop­ping ETHW tokens to devel­op­ers who switched to the PoW chain. The entrepreneur’s free­wheel­ing spend­ing habits and rival­ry with Ethereum make his inter­est in unset­tling its ecosys­tem unsur­pris­ing, but the cryp­to influ­encer is strug­gling to sow doubt in PoS ahead of the Merge.

Three oth­er cryp­to exchanges have list­ed ETHW and ETHS since Poloniex debuted the pair on Mon­day, Gate.io, MEXC and Digifinex, while Bit­MEX is ready­ing to open trade, com­plete with lever­age, in the next few days.

ETHW has bombed already, cur­rent­ly trad­ing below half its all-time high record­ed just after its list­ing, at around $71 as of 8:00 am ET — a whop­ping 96% below ether, which has climbed more than 10% since Monday.

ETHS has stuck clos­er to ether, how­ev­er it still lags ETH by 4%, indi­cat­ing those who’ve tak­en Sun up on his gam­bit are most­ly dump­ing their tokens before the Merge — ETHW espe­cial­ly so.

The sup­port­ing plat­forms have alto­geth­er report­ed about $108 mil­lion in trade for the ether fork tokens so far, split even­ly between the two, per CoinGecko. Poloniex and MEXC report­ed more than 90% of that volume.

Justin Sun sewing Ethereum discord is on brand

Years before Tron, Sun found­ed an app named Pei­wo aim­ing to become China’s answer to Snapchat, but the plat­form evolved into more of a dat­ing app.

Sun has butted heads with the Ethereum camp since he entered cryp­to in 2017. Insid­ers say Tron ini­tial­ly lever­aged a Java imple­men­ta­tion of the Ethereum client for its own soft­ware, and Sun has been crit­i­cized for alleged­ly pla­gia­riz­ing the File­coin and IPFS white papers, includ­ing a dig direct­ly from Ethereum co-founder Vita­lik Buterin.

Nev­er­the­less, Tron’s native token, TRX, is the 17th largest cryp­tocur­ren­cy by mar­ket val­ue, boast­ing cap­i­tal­iza­tion of $14 bil­lion at its peak in 2018.

Sun’s wealth — fueled by TRX — has become the back­bone of his per­son­al brand. In 2018, he bought Bit­Tor­rent for $120 mil­lion in a cash deal, a move to bring users of the peer-to-peer tor­rent­ing tool under the Tron umbrella. 

In 2019, he paid $4.6 mil­lion to have lunch with War­ren Buf­fett. In 2020, Sun spent $20 mil­lion on a Picas­so and $6 mil­lion on a Beeple NFT, hav­ing under­bid the $69 mil­lion Beeple auc­tion won by anoth­er cryp­to entrepreneur.

And last Decem­ber, Sun sunk $28 mil­lion for a spot on one of Jeff Bezos’ Blue Ori­gin space­ship flights, although the trip hasn’t yet occurred. Dur­ing this year’s cryp­to crash, Sun pledged up to $5 bil­lion in merg­ers to save illiq­uid cryp­to firms, mim­ic­k­ing FTX bil­lion­aire Sam Bankman-Fried

But many in the indus­try crit­i­cize Sun for amass­ing his wealth, esti­mat­ed in the hun­dreds of mil­lions to bil­lions, through hype instead of innovation.

“Sun would part­ner with a toast­er if he thought it would pump the price of Tron,” Daniel Keller, co-founder of Web3 com­put­ing com­pa­ny Flux, told Block­works. “It’s all about the mar­ket­ing and very lit­tle about the technology.”

Block­works reached out to Sun for com­ment but did not receive a reply by press time.

Poloniex could benefit from a contentious hard fork

Tron is the sec­ond-largest blockchain by total val­ue locked inside decen­tral­ized finance dapps (decen­tral­ized apps), accord­ing to DeFiLla­ma, with near­ly $6 billion.

No. 1 Ethereum has near­ly sev­en times more, and Sun has not been shy about his desire to dethrone it. Sun repeat­ed­ly casts Tron as the same as Ethereum but with faster and cheap­er transactions.

Sun also has a long-stand­ing rival­ry with Buterin. The pair have repeat­ed­ly exchanged jabs on Twit­ter, and Sun even inter­rupt­ed a Buterin keynote in 2019, accom­pa­nied by a per­son in a Tron-brand­ed avo­ca­do costume. 

The 32-year-old founder retired from his for­mal posi­tion at Tron at the end of last year to take up an ambas­sador post for the Caribbean island of Grena­da — tech­ni­cal­ly grant­i­ng him diplo­mat­ic immu­ni­ty in Switzer­land under cer­tain circumstances.

His past squab­bles with Ethereum still lead many to ques­tion Sun’s motives in sup­port­ing a con­tentious PoW Ethereum fork.

“Justin Sun wants to sow dis­sent, con­fu­sion, and FUD [fear, uncer­tain­ty, doubt] in order for him to ben­e­fit finan­cial­ly,” Hud­son Jame­son, a for­mer Ethereum devel­op­er liai­son, said in a Twit­ter DM. 

Sun denies these claims, tweet­ing this week that his sup­port for an ETH hard fork is “sole­ly for the pub­lic good and not for prof­it at all.” Sun’s Poloniex would hypo­thet­i­cal­ly stand to gain from a suc­cess­ful ETHW launch on Poloniex, which has seen its dai­ly trad­ing vol­ume fall by more than half over the past year, per CoinGecko.

A rep­re­sen­ta­tive for Poloniex said the exchange holds the same views as Sun regard­ing the Ethereum hard fork and is not prof­it­ing from ETHW due to the platform’s zero-fee trading.

“This is more of a ploy for him to bring peo­ple to Poloniex than for him to grow out this [PoW] mod­el,” Flux’s Keller said. “All the tech­nol­o­gy that has to be built on this new iter­a­tion should have been done two years ago.”

Trad­ing vol­umes and sink­ing prices indi­cate ether hold­ers aren’t buy­ing Sun’s nar­ra­tive. His seem­ing­ly ill-fat­ed attempt to divide Ethereum may indi­cate the public’s reduced appetite for charis­mat­ic cryp­to influ­encers of Sun’s ilk. 

Terra’s Do Kwon and Cel­sius’ Alex Mashin­sky both threw bois­ter­ous pub­lic per­sonas behind their busi­ness inter­ests before meet­ing spec­tac­u­lar meltdowns. 

“What we’re start­ing to see is a more edu­cat­ed blockchain com­mu­ni­ty,” Keller said, adding that investors will need to be more scrupu­lous ahead of the next bull mar­ket. “Make no mis­take, there will be more Justin Suns.”

In any case, ether is gain­ing momen­tum as ETHW floun­ders. ETH topped $1,900 on Thurs­day for the first time in nine weeks after the protocol’s final test before the Merge, which occurred on the Goer­li test­net, was successful.

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  • Jack Kubinec


    Edi­to­r­i­al Intern

    Jack Kubinec is an intern with the Block­works edi­to­r­i­al team. He is a ris­ing senior at Cor­nell Uni­ver­si­ty where he has writ­ten for the Dai­ly Sun and serves as Edi­tor in Chief of Cor­nell Clar­i­tas. Con­tact Jack at [email pro­tect­ed]

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