Is it time to go long Ethereum?
Editor's Note: This article comes fromDeepChain (ID: deepchain-eva), Author: Bu Er Do, reprinted by Odaily with authorization.
Editor's Note: This article comes from
DeepChain (ID: deepchain-eva)
DeepChain (ID: deepchain-eva)
, Author: Bu Er Do, reprinted by Odaily with authorization.
Ethereum is once again in the spotlight.
At the same time, the price of Ethereum rose accordingly, rising from $230 the day before to $251, a single-day increase of more than 8%.
The momentum of Ethereum DeFi is growing day by day, ERC-20 USDT is popular, and the 2.0 upgrade is coming, all kinds of "benefits" are constantly stacking up.
At the same time, big Vs in the industry shouted orders, institutions bought aggressively, and the sentiment of being bullish on Ethereum gradually fermented and spread.
Is it time to go long Ethereum?
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Long Ethereum
From March 12, when the cryptocurrency crashed until now, the price of Ethereum has been slowly climbing.
Accompanying the summer is the enthusiasm for seeing more Ethereum in the industry.
Currently, the price of Ethereum is around $250.
"I missed two opportunities this year, one is the platform currency, and the other is Ethereum." Some users once complained to DeepChain in this way.
Compared with the dismal market last year, the price of Ethereum has increased by 86.37% this year. During the same period, Bitcoin with the blessing of "halving benefits" only rose by 34.15%, and BCH was even less, only up 22.44%.
To put it bluntly, the growth rate of Ethereum this year has outperformed most mainstream cryptocurrencies.
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The top ten cryptocurrencies by market capitalization since 2020 (except USDT)
Accompanied by the price increase is the increase in the number of currency holders and the increase in trading enthusiasm.
Coincidentally, with the rise in the price of Ethereum, Ethereum options on Deribit recently soared to $30 million on June 1, reaching a new historical high. Although the increase in options trading activity does not indicate future price changes, it can indicate that Ethereum traders are more active in the market.
On June 7, the co-founder of Morgan Creek tweeted that he recently bought a batch of Ethereum and is paying close attention to the market trend for transactions.
In the Ethereum trust fund of Grayscale, a cryptocurrency asset management company, ETHE has a huge premium, with a premium rate as high as 697% at its peak.
In addition, according to Intotheblock statistics, currently 57.19% of Ethereum addresses are flowing into Ethereum, while only 40.01% of addresses are fleeing.
Intotheblock's statistics on the dynamics of Ethereum addresses
"The current Ethereum is very similar to Bitcoin in 2015. After 2015, everyone knows what happened to Bitcoin."
"My main positions are now in Bitcoin and Ethereum, and I am still considering whether to exchange all Bitcoins for Ethereum. I think Ethereum will definitely increase more than Bitcoin in the future."
The sentiment of being bullish and bullish on Ethereum is fermenting and spreading.
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2.0 of "King of Public Chain"
The most important reason why Ethereum is bullish by investors is that Ethereum 2.0 is about to land.
We all know that the ultimate goal of Ethereum is to become a world computer.
Dreams are great, but compared with the processing speed of Ethereum at 15 transactions per second, it seems a bit far-fetched.
In May, Vitalik tweeted that he regretted launching ethereum in 2014 because there were so many bugs that had to be fixed.
In fact, although Ethereum has successfully occupied the second place in the cryptocurrency field with ICO after its launch, Ethereum has been criticized for performance problems such as congestion and inefficiency.
And this is Ethereum 2.0.
"Different from the high degree of centralization of EOS's 21 nodes, the number of open nodes in Ethereum will be as high as 1 million." Song Wuwei, founder of the Ethereum fearless community, told DeepChain.
In Ethereum 2.0, the verification node deposits funds (at least 32 ETH pledged) into the official deposit contract (official deposit contract) developed by the Ethereum Foundation. Validators will download and run the Ethereum 2.0 client software, and while running the client software, will be randomly selected to package or verify blocks on the chain. Validators who package and validate blocks correctly will be rewarded with Ethereum.
According to the latest data from Arcane Research, the number of wallets holding more than 32 ETH Ethereum has grown steadily as of now, with nearly 120,000 addresses currently eligible to be validators.
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The number of addresses holding more than 32 Ethereum
In fact, that number has soared 13% since the start of last year.
Behind the soaring numbers, some investors believe that after the upgrade of Ethereum 2.0, its currency price has huge potential for appreciation.
In the view of this investor, there will be $8 billion in Ethereum locked up for a period of time in the future, which will cause the entire Ethereum ecosystem to be in a state of deflation, which will increase the price of Ethereum, and may even reach a record high. high.
"I dare not talk about the new historical height. After all, the height of 1,432 US dollars is too high, but it is definitely no problem to exceed the highest price of 300 US dollars last year." Song Wuwei said.
In addition to the landing of Ethereum 2.0, the excellent ecology of Ethereum itself is also one of the reasons why people are bullish.
According to the first-quarter DAPP data report released by DappReview, Ethereum leads EOS in all dimensions: the total number of Dapps is 3.3 times that of EOS; the number of active users is 4.4 times that of EOS; and the transaction amount is 3.2 times that of EOS.
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Distribution of Dapp transaction volume in the first quarter of 2020
"If Ethereum is really useless, can it still sit firmly in the second place of cryptocurrency?" Some Ethereum players asked DeepChain, "No one will bet on a public chain with no future, right?"
In fact, after Ethereum was founded, countless public chain teams expressed their intention to surpass Ethereum.
After Ethereum was dubbed blockchain 2.0, public chains claiming to be blockchain 3.0 or even 4.0 emerged in endlessly.
However, after several years of development, we found that the public chains that once claimed to surpass Ethereum are now stuck in a development dilemma due to the lack of sufficient developers and community activity.
After going around for a while, I found that God V is still the boy he used to be, and Ethereum is still the "king of the public chain".
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DeFi, Ethereum Moat
If the "synonym" of Ethereum in 2017 was ICO, then from 2019 to now, DeFi has completely become the "endorsement" of Ethereum.
As of now, DeFiprime data shows that there are a total of 245 DeFi products on the Ethereum, Bitcoin, and EOS chains, of which Ethereum exclusively occupies 200, and its market lock-up value has also reached a record high, reaching 1.221 billion US dollars.
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The number of DeFi products on the three major public chains
Decentralized stable coins and exchanges, lending, payment, derivatives... DeFi, which is considered to replace traditional finance, has taken root on Ethereum and has grown stronger. Its complexity and robustness far exceed other public chains.
Even in some people's eyes, DeFi has become the moat of Ethereum.
In the future, with the gradual landing of Ethereum 2.0, DeFi may be able to obtain a broader development space with the support of Ethereum's higher performance.
Ethereum provides a suitable soil for the development of DeFi, and DeFi is also "feeding back" Ethereum.
On the one hand, since WBTC adopts ERC-20 tokens, holders can use DeFi services. On the other hand, WBTC token value is pegged to Bitcoin as it is guaranteed to be fully backed by real Bitcoin. For every WBTC on Ethereum, one bitcoin is locked to back it.
In other words, through WBTC, Bitcoin assets can be transferred to Ethereum for use.
In addition, just like the lock-in effect brought by PoS, DeFi also locks the originally circulating Ethereum tokens in the application.
In February of this year, the locked assets in Ethereum DeFi products exceeded the US$1 billion mark, and have now exceeded US$1.2 billion. The number of DeFi projects with more than $30 million in locked-in assets has also changed from 1 a year ago to 8 now.
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DeFi products with more than $30 million in assets locked on Ethereum
Thanks to DeFi, more and more funds have entered the Ethereum ecosystem.
Rune Christensen, the founder of MakerDAO, more or less agrees that in his opinion, because of the existence of DeFi, Ethereum will "attract all value."
“In a recent transaction, 4 million DAI was minted (by staking) in WBTC alone. This really shows underlying demand for non-ETH assets, and it’s the start of a broader trend of DeFi as an economic vacuum that will eventually Attract nearly all value to the Ethereum chain.”
In the view of Cao Yin, managing director of the Digital Renaissance Foundation, the addition of DeFi has finally made the Ethereum ecology have real useful value other than pyramid schemes, "equivalent to injecting soul into Ethereum."
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USDT Brings a Market Value Premium
Of course, it is not just DeFi that provides a market value premium to Ethereum, and perhaps USDT.
According to Tokenview data, the issuance of USDT based on ERC-20 began to rapidly approach Omni USDT in 2019, and finally surpassed Omni on July 4 of that year.
ERC-20 USDT surpassed Omni USDT on July 4, 2019
At that time, some analysts pointed out that in addition to the technical advantages of ERC-20 USDT, such as shorter confirmation time and lower transaction costs, the reasons for Tether’s massive issuance on Ethereum were firstly the demand of the Ethereum DEX project, and secondly, At that time, DeFi was full of vitality, and there might be new demand for ERC-20 USDT.
Perhaps due to network effects, Tether focused on Ethereum.
As of now, according to Arcane Research platform data, USDT issued based on ERC-20 accounts for 78.53% of the total USDT. Much larger than Tron with 16.27% and Omni with 5.2%.
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Changes in the market share of USDT on the three public chains of Ethereum, BTC and Tron
On June 5, Bloomberg stated that the market value of USDT has surpassed that of XRP, and if it issues more, it is likely to surpass Ethereum.
"This is a good thing." Song Wuwei told DeepChain, "Just like Apple's market value must be much higher than that of the New York Stock Exchange, this is a normal phenomenon."
Many people believe that the existence of USDT has brought popularity and attention to Ethereum, as well as a rise in currency prices.
While ERC-20 USDT overtook Omni USDT market share last year, the price of Ethereum also rose accordingly, from $138 at the beginning of 2019 to a peak of $301 on July 4.
This value, on the one hand, comes from the fact that USDT has contributed a lot of transaction fees on the Ethereum chain.
According to Tokenview data, as of now, the average daily transaction fee of ERC-20 USDT in the past seven days has reached 910.42 Ethereum, accounting for about 40%-50% of the total daily transaction fee of Ethereum.
On the other hand, the addition of USDT also allows DeFi applications on Ethereum to have basic assets. Although USDT is not a compliant asset, it is not important for decentralized financial products.
Yang Mindao, the founder of dForce, also expressed the same opinion. In his opinion, stablecoins (including USDT) are the cornerstone of encrypted finance, and the more stablecoins issued, the more conducive to the financial ecology of the chain.
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From the above, it seems that there is nothing wrong with being long Ethereum.
But is reality really as good as beautiful data and ambiguous correlation associations?
We have noticed that while USDT contributes to handling fees, it is also further pushing up the transaction fees of Ethereum.
According to ethgasstation data, in the past 30 days, among the Ethereum network fee consumption rankings, USDT consumed 10,700 Ethereum, ranking first, and higher than the sum of the consumption of the second to eighth. As a result, the handling fee of Ethereum was directly raised to 42Gwei.
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Fee Consumption Ranking on Ethereum
The high transaction fees have seriously blocked the not-so-smooth network of Ethereum.
"The emergence of USDT is both an opportunity and a challenge for Ethereum." Cao Yin and Song Wuwei held the same view.
With its huge network effect and broad community consensus, Ethereum was able to defeat EOS and TRON, and was favored by USDT.
But conversely, even BAT-level visits are not needed, USDT and DeFi, plus the MLM market represented by 3M, the three products have already made the congestion problem of Ethereum unable to be solved for a long time.
"If Ethereum can complete the upgrade of phase 4 as soon as possible, then the problems caused by USDT super issuance will be solved." Cao Yin told DeepChain, "On the contrary, Ethereum will be due to high gas fees and increasing Severe congestion and slow death."
In addition, although DeFi on Ethereum is extremely hot, if Ethereum does not speed up, this killer app that it is proud of will eventually leave.
"Don't think that Ethereum is the optimal solution for DeFi. For DeFi, there is no public chain more suitable than Ethereum in the blockchain at that time." Cao Yin told DeepChain.
"However, the DeFiization of Ethereum has inadvertently squeezed out developers of other applications on Ethereum. The recent Ethereum community conferences have almost turned into DeFi conferences, and the opportunity left for other application developers is very large. Less." Cao Yin told DeepChain.
Too much emphasis on DeFi often ignores the exploration of other fields.
When a large number of DeFi protocols are deployed on Ethereum, the new Ethereum upgrade will inevitably take into account the interests of DeFi applications and users.
Lucky? Woe? Can't tell yet.
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In addition to foreign troubles, there are more internal worries
In addition to potential external risks, internal disputes and differences will also interfere with the upgrade process of Ethereum to a certain extent.
"It's only phase 0 now, and the upgrade of Ethereum is equivalent to just taking the first step." Song Wuwei told DeepChain, "Be optimistic about 2022, and pessimistic about 2024. To complete the transformation of Ethereum, you still need a long time."
In Song Wuwei's view, the quarrel has always been throughout the development of Ethereum.
As early as 2018, the upgrade of Constantinople, originally scheduled for November of that year, was postponed to January 2019 due to various problems.
Until this year, the upgrade progress of Ethereum has been delayed again and again, and the progress of Phase 0 of Ethereum announced on June 1 should have started as early as January this year.
Ethereum developer Jameson Hudson once said that there are not enough people out there to actually help us solve these problems.
In addition to the continuous system problems, there are also disagreements among various groups in the Ethereum ecosystem.
As early as 2018, Taylor Monahan, the core developer of the Ethereum wallet MyEtherWallet, announced a solo flight and launched a new project MyCrypto.
On February 15 last year, Afri Schoeden, the core developer of Ethereum and the release manager of the main client Parity, left the day before the fork upgrade of Ethereum.
Andreas M. Antonopoulos, the author of "Mastering Bitcoin", is even more worried that infighting will split the technical community of Ethereum.
In his view, with ETC as a precedent, perhaps the future Ethereum may follow the old path of BTC forking BCH and BCH forking BSV.
In addition to the quarrels among core developers, Ethereum miners also have a lot of differences in their attitudes towards this reform.
As we all know, almost all Ethereum miners are fans of the PoW mechanism. After Ethereum 2.0 completely fell to PoS, their old mining machines can no longer mine Ethereum, which may cause the loss of a large part of Ethereum’s supporters. .
On March 31 this year, the Ethereum mining company HIVE acquired a 30-megawatt Bitcoin mining facility from Cryptologic Corp for $2.8 million, announcing that it would diversify mining. This move is undoubtedly a precaution for itself.
In addition, when miners and other dissidents leave Ethereum, Ethereum will also face a weak window period due to the shrinking of its own ecology. During the window period, the security of the main network of Ethereum will be affected. vulnerable to attack.
This is indeed a severe test for the entire Ethereum community.
"In the future, Ethereum miners are very likely to transfer to ETC." Cao Yin said.
On June 6, ETC Labs founder James Wo tweeted that Ethereum will reach $10,000 in the next 10 years, but ETC will reach $1,000 sooner.
Perhaps, ETC is happy to see the departure of Ethereum miners.
In Song Wuwei's view, due to the above reasons, according to Ethereum's consistent style, it is almost impossible to complete the transformation in 2022, and if the promise cannot be fulfilled on time, it will be negative.
Coincidentally, Cao Yin also expressed the same opinion on this, and on this basis, he further stated that time is not on the side of Ethereum.
