Why is Ethereum a true representative of open finance?

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, by Jhonny, published with permission.

In the traditional financial world, the most important thing is trust and a centralized governance model. When the idea of ​​a cryptocurrency like Bitcoin was proposed, it was an attempt to provide an alternative form of finance, one that was trustless and entirely dependent on code. While the crypto world also has its flaws, it still represents a decentralized and trustless system compared to the type of money provided by the state.

In the latest episode of the Epicenter podcast, Mythos Capital founder Ryan Sean Adams highlights why cryptocurrencies are digital alternatives to central bank fiat currencies like the U.S. dollar, while detailing Ethereum's role in such an ecosystem. Adams said:

"I do think that the world has developed a digital alternative because we've had physical money in place of fiat in the past with things like gold and commodity assets, but cryptocurrencies allow us to have a digital alternative for the first time, An alternative to a digital dollar backed by a central bank.”

According to Adams, as more and more users switch to this new form of money, it will inevitably grow in popularity. Adams continued:

"Money and capital will flow from this old traditional world to this new world. It may take decades, it may take generations. But you know, future generations will have an alternative tradition The choice of the system, hopefully it restores more balance."

For years, the question of Bitcoin’s scalability has been a barrage of contention as it was positioned as a digital asset that would make fiat currencies obsolete. But according to Adams, the ethereum ecosystem and its native token ETH are promising in this regard. He said:

"Want to have a bankless financial system (bankless financial system) and have a bankless store of value at the base layer. In my opinion, ETH as a store of value in Ethereum is probably the most important currency in the entire stack. LEGO (money lego)."

Additionally, in a recent blog post by Adams, he elaborated on Ethereum’s growing role in the stablecoin ecosystem, highlighting that Ethereum accounts for more than 75% of the overall stablecoin market. He wrote:

“Not only are other Ethereum stablecoins growing, but USDT itself is migrating most of its stablecoins to the Ethereum network. Today, Ethereum accounts for more than 75% of the entire encrypted stablecoin market.”

The following figure shows the market value change trend of USDT issued based on Bitcoin (dark green line) and USDT issued based on Ethereum (light green line) over the past year. It can be seen that the latter is showing an overtaking and growing trend:

Why are stablecoin issuers such as USDT and USDC choosing to issue their stablecoins on Ethereum instead of Bitcoin? According to Adams, “because stablecoins are more useful on the ethereum network than they are on the bitcoin network.”

Adams explained that the Ethereum network can provide stable currency issuers with programmability, access to the DeFi field, scalability & user experience improvement, and a rich Ethereum ecosystem (Ethereum wallet, developer & exchange ecosystem), etc. Advantage.

Adams added that the Bitcoin network was the largest stablecoin settlement network last year. At that time, the USDT issued based on the Omini protocol was completely dependent on the Bitcoin network for settlement; and with the migration of USDT to the Ethereum network (issued based on the ERC-20 protocol) , the current Ethereum network is close to surpassing the Bitcoin network and becoming the largest stable currency settlement network.

At the end of the article, Adams elaborated on his expectations for the future: "We are left with more overtakes ahead: at some point, your crypto net worth exceeds your traditional net worth; at some point, your crypto Banks are more useful than your traditional bank; at some point, your Ethereum address is more useful than your bank account.”