The Ethereum Merge presented numerous risk-free arbitrage opportunities, with one scientist team reportedly earning nearly 10,000 ETHW (~$200K). Their strategy? Using valueless tokens like USDC to extract valuable assets from liquidity pools.
Key Arbitrage Mechanics
Why USDC Became "Worthless" on ETHW
EthereumPoW (ETHW) emerged when miners refused to abandon PoW profits after Ethereum's transition to PoS. While this fork replicated all ETH assets, stablecoin issuers like Tether and Circle explicitly denied backing ETHW-chain versions—creating a critical loophole.
The arbitrage window opened when:
- ETHW-chain USDT/USDC became unbacked "shadow assets"
- Undrained ETH/WETH remained in liquidity pools (LPs)
- Traders swapped worthless stablecoins for real ETHW, later sold on exchanges
👉 Discover how top arbitrageurs exploited this gap
Top Performers & Tactics
OKLink's analysis revealed 217,129 ETHW ($4.3M+) in total profits across 8 major LPs. The ranking surprises:
| Rank | Address | ETHW Profits | USD Equivalent* |
|---|---|---|---|
| 1 | 0x3dca | 26,541.8 | $530,836 |
| 2 | 0x1f9 | 18,720.5 | $374,410 |
| 3 | 0xefe | 9,779.3 | $195,586 |
*Based on ETHW price at time of reporting
Two Primary Methods:
- Router Interaction: Frontend-built DEX interfaces to swap shadow assets for ETH(W)
Arbitrage Contracts: Multi-step pooling via customized smart contracts
- Example: 0x3dca's contract converted 33,235 USDC into 16,855 WETH across 3 LPs
Critical Timeline Insights
The 9-day window saw most ETH drained by September 25. Top earners acted within 5 minutes of ETHW's first block (September 15, 22:11 UTC).
Monitoring Tools & Prevention
OKLink's TokenScanner identified risks through:
- LP liquidity alerts
- Rugpull detection labels
- Real-time "profit address" tracking
Supported: 9 chains, 13 DEXs, 418K scanned tokens (161,940 flagged)
👉 Protect your assets with advanced monitoring
FAQ
Q: How did USDC lose value on ETHW?
A: Stablecoin issuers didn't back ETHW-chain versions, making them unexchangeable for real USD.
Q: Could this happen again in future forks?
A: Yes—whenever asset backing isn't replicated across chains, similar opportunities may emerge.
Q: What's the best defense for LP providers?
A: Use real-time liquidity monitors and withdraw funds at the first sign of abnormal activity.
Q: Were all profits risk-free?
A: Mostly yes, though gas fees (paid in ETHW) reduced net gains slightly.
Q: How do arbitrage contracts work?