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September 18, 2020
6 minutes of reading
Opinions expressed by Business owner the contributors are their own.
Founded more than five years ago, the Ethereum platform and its native ether (ETH) have mainly existed in the shadow of bitcoin in the public eye. However, Ethereum has gained momentum especially in the past few months. In July of this year, it was reported that the use of the Ethereum network has surpassed that of bitcoin.
Ethereum has been the subject of a lot of interest in recent weeks, particularly in the context of the DeFi boom. Ethereum and ETH are worth looking closely at, and here’s why.
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1. Going through a period of greater volatility
Ether has been more volatile than bitcoin in recent weeks. Volatility metrics place rates at 29% in the last week of August, which represents a maximum of six months. More recently, in the span of just ten days between August 27 and September 6, the price of ETH has risen by 30% to reach the highest price since the fourth quarter of 2018 ($ 485) before falling again by 33 %.
This volatility – unusual at this rate even for cryptocurrencies – is attributed to the increased use and interest of DeFi. Traders and cryptocurrency holders will want to keep an even closer eye on ETH prices these days.
2. The boom of the DeFi market
DeFi (decentralized finance) has seen tremendous growth in recent months, as dapps that facilitate lending, lending and smart contracts are suddenly becoming more numerous and popular. The total value locked in DeFi hit an all-time high on Sept. 2 at over $ 9.5 billion, which means an increase of nearly 800% over the past three months.
The vast majority of DeFi dapps are on the Ethereum network: of the 247 dapps currently available, 201 are on Ethereum (with another 24 on bitcoin and 22 on EOS).
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3. The Ethereum 2.0 update
In early August of this year, the long-awaited Ethereum 2.0 update, known as Serenity, was launched. It made significant improvements to the platform, including a noticeable improvement in efficiency through sharding. The increase in Ethereum’s processing capabilities means that the network is capable of handling many more transactions, facilitating the increase in the use of DeFi.
4. Serenity ensures that Ethereum will continue to grow
Towards the end of 2019, the older version of Ethereum was experiencing major efficiency issues, as well as increasing ether prices. The serenity update solved these problems, providing growth opportunities for the platform. Ethereum is going through a period of explosive growth, as evidenced by the increase in the total value of DeFi.
5. Ethereum’s functionality continues to expand
Innovations in how Ethereum’s capabilities can be applied to various aspects of not only asset management but also daily life are frequent, as new features are added. For example, the already very useful and popular use of smart contracts has recently been increased by dapps like Chainlink, which facilitates communication between blockchain-based protocols and off-chain information sources.
This suggests that we will continue to see the expansion of the number and variety of practical applications offered by Ethereum-based dapps, ensuring further growth of the platform and value of the ETH cryptocurrency. Additionally, Ethereum-related news is worth following to keep pace with blockchain innovation and identify opportunities for new types of business ventures.
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6. Ethereum is the preferred platform for stablecoins
The flexible functionality of Ethereum’s digital contracts lends itself extremely well to issuing stablecoins, cryptocurrencies pegged to a fiat currency to minimize the volatility factor. The two most important stablecoins are Tether and USDC, both based on Ethereum and both through a period of large (and relatively steady) growth over the past year, with assets increasing from $ 1 million to over $ 7 million in 12 months. .
7. Compound and other decentralized money markets
One of the biggest players in the DeFi market is Compound, a money market protocol that allows users to earn interest or borrow assets against cryptographic collateral. Compound is based on Ethereum and it too is seeing explosive growth. In several months of operation, it raised about $ 700 million in assets and, in June, played a major role in the DeFi boom by encouraging cash extraction. Overall, Ethereum’s decentralized money market platforms – with Maker and Synthetics being the other top platforms alongside Compound – control over $ 2 billion.
8. The number of Ether whales is increasing
“Aether Whales” are users who hold between 1,000 and 10,000 ETCs, which currently equate to approximately $ 350,000 to $ 3 million. At the end of August, two unknown ethereal whales separately moved 189,735 ETH worth around $ 80.88 million at the time, attracting considerable public interest in ETH and its native Ethereum. On September 7, meanwhile, another unknown whale transferred $ 76 million in ETH.
Even more interesting is the fact that in early September, when the price of ETH dropped by around 30%, as many as 68 new whales joined the game.
9. Offers several ways to make a profit
From mining Ethereum to faucets and staking, there is no shortage of ways to create ETH with sufficient processing power or risk tolerance. Ethereum-based DeFi dapps provide additional incentives for new users to enter the world of cryptocurrencies, such as liquidity mining and the ability to borrow fiat against crypto collateral.
10. Here to stay
Ethereum is no fad – the platform and the ever-expanding technology behind it will continue to grow as time goes on. Being a completely decentralized system with no pivot points, it is virtually impossible for Ethereum to go offline. The potential offered by Ethereum-based apps means that ETH is also here to stay – the platform’s native currency is required for contract completion and dapps implementation. Although bitcoin is still generally trending higher than Ethereum, the two platforms (and their cryptocurrencies) serve different purposes, so there is no risk of BTC completely overtaking ETH.
Related: 4 Ways to Smartly Invest in Cryptocurrencies
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