The DeFi market is booming, but why hasn't it driven up the price of Ethereum?
Over the past few weeks, DeFi-related tokens have stood out in a crowded market, with many gaining more than 100%.
FoamFoam", but DeFi is still rapidly becoming popular. This trend has not faded as quickly as some analysts expected, and it may continue to maintain a strong momentum in the next few months. And it has led to a large number of new users. into Ethereum and is seen as a legitimate use case for cryptocurrencies.
But to the dismay of many Ethereum investors,Although DeFi is built on top of Ethereum, the growth of the DeFi space has not increased the price of ETH.
There are many theories as to why this is the case, and some traders speculate that the DeFi debacle will actually help steer the evolution of cryptocurrencies.
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ETH's status is strengthened as DeFi projects grow
At the time of writing, Ethereum is currently trading at $230, up slightly, but has been trading in circles for the past few weeks.
The cryptocurrency has been trading sideways alongside bitcoin for over a month now.It has formed a range between $230 and $250 and is unable to pick up a clear trend.
Nonetheless, DeFi projects, which are largely built on top of Ethereum, have seen tremendous growth. It even led to the number of daily ETH transactions exceeding 1 million for the first time since the bull run in late 2017.
According to data from DeFi Pulse, there are currently a total of$1.7 billionsecondary title
3 Reasons Why DeFi Can’t Transfer Value to ETH
A well-known investor and ex-Goldman Sachs partner, Spartan Black (Twitter name), recently explained 3 main reasons why Ethereum is not rising along with DeFi-related tokens.
He pointed out that the first reason may simply be due to theInvestors prefer direct exposure to tokens。
The second reason may be due tointroduced alternative collateral, so it is not necessary to buy ETH to participate in DeFi loans.
UncertaintyUncertainty, the uncertainty surrounding whether the ethereum 2.0 transition will disrupt its composability, which he says is critical for DeFi.
As for factors that could bring value to cryptocurrencies, he pointed to developments related to ETH2.0 and EIP-1559:
"That's not to say ETH isn't a good investment, butThe impetus for ETH seems to be more related to the progress of ETH2.0 and EIP-1559 than directly related to DeFi. So if you want to get DeFi exposed, your best bet isThe original text comes from bitcoinist, compiled by the Bluemountain Labs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.。”
The original text comes from bitcoinist, compiled by the Bluemountain Labs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.
