If Defi develops well in the long run, the industrial value of Ethereum will reach $1 trillion
Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc), compiled by: Captain Hiro, published with permission.
Babbitt Information (ID: bitcoin8btc)
Babbitt Information (ID: bitcoin8btc)
, compiled by: Captain Hiro, published with permission.
According to a report by AMBcrypto on February 26, for those new investors who have just entered the digital asset market and do not understand any industry information, they may be more inclined to buy Ethereum. Because in 2020, the value of the world's second largest cryptocurrency asset has increased by 106.44%, surpassing other currencies such as Bitcoin. Despite a sharp drop in the price of Ethereum over the past two weeks, overall sentiment remains positive.
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Source: TradingView
Recently, Nick Cannon, founder of EthereumPrice.org, discussed Ethereum’s long-term vision for transitioning from a $1 billion market industry to a $1 trillion industry.
Cannon used the term “economic bandwidth” when referring to Ethereum-powered DeFi (decentralized finance) applications. Cannon said that in order to ensure the long-term success of DeFi, Ethereum's current lending process requires a "collateralization ratio" of 1.5 times; Collateralized, the network will allow loans of up to $20 billion.
At press time, ETH used for mortgages and other financial applications totaled about $2.8 million, just under 2% of the total 109 million ETH in circulation.
According to Cannon, based on Ethereum’s expected supply inflation rate, assuming that the total number of Ethereum will not exceed 120 million, then 10% of its total supply will provide economic bandwidth for a $1 trillion derivatives market. According to calculations, the price per coin of these 12 million Ethereum needs to reach $80,000.
Aside from this overly optimistic assumption, it is important to note that DeFi is not currently a reliable lending protocol.
Image credit: Skew
The recent bZx attack caught the attention of those in the industry as more than $1.2 million worth of Ethereum was stolen in two elaborate schemes. While Cannon believes such attacks will continue to some degree, it remains a major consideration before pinning all hopes on Ethereum’s DeFi protocol.
