The Messy Middle: Or What Actually Happens if BIP110 Splits the Chain

Jimmy Song examines the likely scenario if BIP110 creates a chain split—not the clean outcomes either side predicts, but a messy middle ground.

Song distinguishes between two terms: wipeout (one chain overtaking another and erasing its history) and URSF (User Resisted Soft Fork nodes that reject BIP110 signaling).

Timeline

The process unfolds across three dates:

• Block 961,632 (Aug 8): Mandatory signaling begins; chains can first diverge
• Block 963,648: Lock-in occurs
• Block 965,664 (Sept 1): Actual rule activation takes effect

A four-week window exists where both chains accept identical transactions—only the block headers differ.

Why Clean Scenarios Seem Unlikely

Song analyzes four “clean” outcomes (0% hashrate adoption, 50%+ adoption, hard fork, URSF mass adoption) and finds all improbable. Current signaling sits below 1% cumulatively but reached 4% recently—enough to sustain some minority chain blocks but far from majority support.

Economic Pressures

The minority chain will experience higher transaction fees due to scarcity. Mining becomes economically rational only when fee revenue exceeds opportunity cost, which depends on the price ratio between the two coins. Using Predyx market data (~10:1), Song calculates switching thresholds at roughly 2,800 sats/vbyte.

The Dumper’s Paradox

Those holding minority chain coins face a trap: paying high fees to exit funds increases miner profitability, potentially attracting hashrate and increasing wipeout risk—the opposite of what they want. Song notes an uncomfortable irony: opponents must paradoxically discourage wealth-maximizing behavior.

Practical Constraints

Coinbase maturity (100 blocks) creates miner lock-in—they cannot immediately spend earned fees. Exchange adoption remains uncertain due to wipeout liability. Large institutional holders (like Bitcoin ETFs) may be contractually prevented from claiming fork coins.

The Core Insight

“Incentives establish bounds,” but frictions matter tremendously. Publicly traded miners face hedging agreements, audit committees, and disclosure obligations preventing quick pivots. Small private operators can switch instantly, suggesting movement from 4% to 8-12% is plausible without major pool participation, but reaching 50% requires institutional actors facing the highest switching costs.