10 Ethereum Metrics That Made New Highs in 2020
Editor's Note: This article comes fromGolden Finance, reprinted by Odaily with authorization.
Editor's Note: This article comes from
Golden Finance
Golden Finance
, reprinted by Odaily with authorization.
As far as public perception is concerned, BTC has been in the spotlight in 2020.
BTC has the reputation of "digital gold" and is also the "best tool" for hedging inflation, and it has gradually been recognized in the field of investors. As a result, many institutions have also generated renewed interest in BTC, pushing its price to record highs.
Legendary fund managers such as Paul Tudor Jones and Stan Drunkenmiller bought a lot of BTC and became BTC advocates. Meanwhile, Square, Mass Mutual and MicroStrategy became the first companies to hold BTC on their balance sheets, some more than others.
In the summer of 2020, the Ethereum community experienced the DeFi wave, which attracted a lot of attention and a lot of funds, and introduced a new distribution mechanism for the ownership economy. However, most of the impact of the DeFi wave stayed in the community.
At the same time, the price of ETH has been falling more than 50% from its all-time high.
Still, the ethereum economy has had a stellar year, which is something to watch. From the launch of Ethereum 2.0 to the DeFi yield-farming boom, the entire ecosystem has experienced exponential growth. Dozens of Ethereum metrics hit new highs during the year.
Here are 10 charts showing new highs for Ethereum in 2020.
Ethereum network usage hits new high
Network usage is arguably one of the most fundamental metrics for measuring the health of any public blockchain. In short, it can also be seen as the demand for block space, meaning that people are actually willing to use (and pay for) the ledger in this blockchain as a settlement layer.
The demand for Ethereum block space has reached its limit. The demand for using Ethereum has always been very large, and the usage rate of the network has remained high, and it really cannot meet more needs.
Whether borrowing capital on Aave or Compound, swapping tokens on Uniswap, trading derivatives on syntix, launching a DAO, or sending crypto dollars to anyone in the world, Ethereum has huge potential as a settlement layer for the decentralized economy. need.
Now, Ethereum needs to scale. Despite layer2 solutions (promising rollups, upcoming Eth2 upgrade), the demand for block space in the network is too high and capacity needs to be increased to maximize its effectiveness.
Ethereum hash rate hits record high
Despite the imminent transition to PoS, the Ethereum hashrate has climbed to new highs. In other words, the web is more secure than ever. According to The Block, the Ethereum hash rate is above 271 TH/s, surpassing the all-time high of about 240 TH/s in September 2018 during the bear market.
July 2021 is the launch date of the difficulty bomb, and miners are rushing to mine the remaining ETH as fast as possible before their equipment is "bricked". But for the Ethereum community, whether the launch of the difficulty bomb needs to be postponed again is another question.
While all Eth2 phases are happening simultaneously and should start faster than Phase 0, it would be a bit overconfident to think that the Ethereum network will move to PoS within 6 months.
ETH options open interest reaches new high
Options Open Interest is the total outstanding value of outstanding options. Ethereum options open interest is close to $1 billion. While this number is still relatively small for the entire Ethereum network, it does give us some key information about the network. Nic describes this aspect elegantly in his article:
Derivatives initially provided farmers with hedging crop exposure, locking in specific prices for harvests (providing liquidity for future crops, with the purpose of being able to buy seeds and fertilizers now), and similarly, options are also very useful for BTC producers (miners) . Based on a reasonable extrapolation of the hash rate, miners can roughly determine how many BTC they can mine with their equipment. If they want to get an "advance payment" to mine BTC, they can sell call options. This means delivering BTC at a certain price on a certain date promised, only they get paid now. With this upfront payment, they can fund mining more efficiently.
Based on this table, I know that BTC miners can now use more complex financial products to hedge their risks. In theory, this should mean that the BTC mining industry is more stable and less susceptible to boom and bust times. It allows miners to focus on operating efficiently without having to worry about unhedging their equipment.
Likewise, the number of options on Ethereum is growing, which allows for more efficient mining, as options can be used to hedge against volatility risks, and selling call options can finance mining.
In addition, the options market allows traders to do more, show their views on the market, and provide market participants with more tools to support more capital inflows.
All in all, $1 billion in open interest is a positive sign for the Ethereum network, implying greater access to financial instruments for market participants.
The number of DeFi users hit a new high
At the beginning of this year, the number of DeFi users was less than 100,000, but since then the number has gone parabolic, and the number of users of all protocols has exceeded 1 million. It’s important to note that “DeFi users” in this case are really just the number of distinct addresses, which may exceed the actual number.
Anyway, the image above speaks for itself. The number of wallets participating in DeFi has risen vertically, and the public is well aware of the reasons behind it.
After the introduction of liquidity mining, there was a brief upsurge in the Ethereum ecosystem, which quickly swept the entire system. At its peak, new DeFi protocols were born every day, generating countless liquidity mining, which poured into the original token mining pool one after another. Within a few hours, some bad project parties would withdraw from the trading pool. fluidity. This is very similar to the ICO boom of 2017, when new tokens were released every day and billions of users flooded into the cryptocurrency space.
The DeFi boom can still bring benefits. The cryptocurrency industry has introduced a new distribution mechanism, which is very important because it can have a significant impact on future equity distribution. Where is the point of the mechanism? Give ownership to whoever provides and creates the most value: the user.
Platforms like Facebook, Youtube, Twitter, Uber, and Airbnb don't really create value on their own. They rely on individual and network effects. Every platform user makes it more and more valuable. Some of these platforms produce video content for the global public, and some allow strangers to carpool for travel, relying entirely on individuals to create value. People don't just go to Facebook to read Facebook content, and they don't just live in an Airbnb house.
It's all about the individual at work.
So why not let them also have platform ownership? This is DeFi's experiment in liquidity mining. Individuals who provide valuable services to the network (such as providing capital to Compound) gain ownership in the protocol.
For example, Uber drivers can get a small share of equity for every service they provide; Airbnb can get a small share of equity for every guest they host. Such a future is not difficult to imagine.
The total lock-up value reached a new high
Wallet addresses continue to increase, and the total locked value has risen sharply, partly due to the liquidity mining boom.
At the beginning of the year, the total locked value of all DeFi protocols was $600 million. But it was only in February that valuations in this space reached unicorn levels. By the end of the year, the value locked was well over $15 billion, an easy 25-fold increase. As mentioned above, the main reason for the increase in the locked value of DeFi is the liquidity mining boom from June to September.
Driven by Compound’s COMP token, a large amount of capital has poured into new DeFi protocols (some protocols have not been audited), because investors can obtain huge passive income.
DEX transaction volume hits new high
One of the most notable trends this year has been the rise of DEXs. While DEXs have been the most popular use case for Ethereum, they have underperformed expectations in the past. The first batch of Ethereum DEXs had many problems, such as crude interface, slow transaction speed. If you have ever been exposed to DEX, you may remember the situation of trading tokens on EtherDelta (the prototype of Uniswap).
The development of DeFi has overcome various problems, and the situation has undergone major changes.
Under the influence of the summer DeFi boom, DEX trading volume has soared in 2020, reaching a peak of $25 billion in September alone. Even better, the influence of these crypto-native exchanges in CEXs has risen sharply, and the market share of DEX trading volume has reached a peak, accounting for 15% of CEX, achieving huge growth. In 2019, its share was less than 1%. Uniswap, Curve, and Balancer are all important drivers of development in this space.
But Uniswap has a major share. Constant-multiply AMMs account for nearly 60% of all DEX volumes, while other products support low 10-figure dollar volumes. DEXs have made significant progress over the past few years, showing that they have the potential to compete with CEXs.
The nature of the Ethereum financial protocol is permissionless and global free flow, however, it is very difficult to conform to this nature. Uniswap supports the long-tail assets of Ethereum, and it is difficult for it to meet this nature. In Ethereum, any ERC20 token can be launched immediately, there are no cumbersome procedures, and there is no need for listing fees. For fair competition, everyone must follow the same rules. After staking initial liquidity, tokens can be opened to global users, who can trade or provide liquidity with tokens.
As a result, the listing speed of CEX giants such as Coinbase and Binance has been accelerating because DEXs are encroaching on their market. This situation is evident on the day Sushiswap’s SUSHI token was launched on Binance, and Graph’s GRT token was recently listed on Coinbase. , the same situation also occurred.
In the future, we may see CEXs start to use liquidity protocols for token transactions instead of building infrastructure. Do you want to understand how DeFi protocols are the foundation of everything?
Ethereum BTC transaction volume hits record highBTCToday, the BTC circulation in the Ethereum economic system is worth $3.3 billion, accounting for 0.675% of the existing BTC value.
After liquidity mining became an upsurge, BTC circulation rose in a parabola, and the same situation happened to all DeFi things. BTC holders are no longer indifferent, on the contrary, they put BTC into DeFi protocols, wanting to obtain the opportunity of high passive income, such a considerable income is irresistible.
Whether it is becoming a liquidity provider on Curve or Uniswap, or storing tokens on platforms such as Compound and Aave, for BTC holders, the Ethereum decentralized economy provides multiple ways to obtain Passive income, which is consistent with the core cypherpunk philosophy. This is in sharp contrast to other options for BTC holders, who need to stake BTC on centralized lending platforms such as BlockFi or Celsius in order to earn income.
What is more beneficial to them is that Ethereum w
The number is more than before. While wBTC previously dominated the asset class, the Ethereum ecosystem has spawned other similar tokens such as renBTC, tBTC, and sBTC.
I doubt this trend will end anytime soon. In the future, Ethereum will only provide more ways to use funds. For BTC holders, they will only have more tokens like wBTC to choose from.
Having said that, sooner or later, the value of BTC in circulation on Ethereum will surpass the value of BTC in existence by 1% or more.
The number of ETH held by Grayscale hits a new high
Grayscale is becoming a black hole, constantly buying various cryptocurrency assets. The company not only holds 2.5% of the total BTC, but through its investment product EETH, has increased its ETH holdings, accounting for 2.3% of this year’s ETH supply (approximately $1.7 billion). The daily trading volume of the investment product also hit a record high, with an average daily trading volume of more than US$24.6 million in November, well above the previous record of US$15.6 million set in August 2020.
However, investors need to pay attention to one thing. Although the growth of Grayscale ETH products shows good market signs, institutional investors (people who buy EETH) are likely to take advantage of the high premium of EETH and will not use it as a long-term investment. Meaningful investment positions to hold.
For reference, the current EETH premium is 132%, which is a good return for ETH locked up for 6-12 months. In any case, the rise of EETH does provide institutional investors and qualified investors with opportunities to get involved in Ethereum.
They have 6 months to wait for EETH to appreciate to earn a premium, so we can only imagine that at least some of these investors eventually get interested and start researching this investment product and understanding what Ethereum is.
Perhaps many of them will continue to invest in this area.
Ethereum stablecoin transaction volume hits record high
As far as the initial stage of the DeFi explosion is concerned, the reason behind it is likely to be the growth of Ethereum stablecoins. Stablecoins, the “dollars” of cryptocurrencies, peg their value to the U.S. dollar, have flourished on Ethereum over the past two years and are now worth about $2 billion in total.
But in 2018, USDT (USDT) is pretty much the only stablecoin. Today, a variety of stablecoins have emerged, some backed by fiat currency reserves and some backed by algorithms, and this trend shows no sign of slowing down.
Anyone with an Internet connection can buy these stablecoins, so Ethereum can further expand the global users of stablecoins. The recent situation in Venezuela is a perfect example. Circle (the agency behind USDC) has partnered with the Bolivarian Republic of Venezuela and Airtm to provide aid to Venezuelan frontline healthcare workers via USDC.
Venezuela's own financial system is controlled by President Maduro's capital, and they managed to circumvent that control through the cooperation of multiple parties (including the US government), so that medical workers fighting for the lives and health of the Venezuelan people can receive millions of dollars remittance.
But will these countries really do this? We will wait and see.
outlook
The amount of pledge contract ETH hit a new high
This last chart is a bit deceptive as ETH can only go up now. Nonetheless, ETH became the first webbond to achieve unicorn status shortly after launching the Eth2 deposit contract. The number of pledges in this contract currently accounts for more than 1.5% of the total supply of ETH, worth more than 1.1 billion US dollars, ensuring the security of Ethereum's eventual public chain.
While it’s still too early to tell, the influx of capital into staking contracts demonstrates the collective support of the Ethereum community to drive blockchain scaling towards a decentralized future.
outlook
Ethereum also has a lot to celebrate as the price of Bitcoin hits new highs. From fundamentals to various article presentations, there are a range of indicators that point to Ethereum’s adoption as the settlement layer for the global Internet of Value.
The decentralized economy is being built around the clock, and there is plenty of progress to prove it. Think back to two years ago, the DeFi industry barely existed. Now, more than $15 billion in funding is supporting powerful financial applications and $20 billion is backing stablecoins — stablecoins available to anyone with an internet connection.
