The attacking giant, why did Ethereum skyrocket?
Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Editor's Note: This article comes from
Crypto Valley Live (ID: cryptovalley)
Crypto Valley Live (ID: cryptovalley)"DeFi", Author: Josh Stark, translation: Davida, reprinted with authorization by Odaily.
Ethereum is the digital frontier because it is open and programmable, Ethereum offers a vast uncharted territory full of opportunities.
Over the past few years, the area has attracted the first major settlers. decentralized finance (
)'s free market has grown into an industry that is beginning to rival Silicon Valley. This year, a second ecosystem began to take root: the maker economy of crypto art, music, and media.
Meanwhile, the ethereum community is preparing to make the most significant change to the core protocol in its short history. Ultimately walk on its busy road.
As in 2018 and 2019, our aim is to zoom in and show you the bigger picture. This blog post is not comprehensive - writing a comprehensive overview of Ethereum is next to impossible. Instead, we focus on a handful of trends we believe are most important.
In our opinion, these are the biggest developments of 2020:
Larger than Bitcoin, Ethereum surpasses Bitcoin as the blockchain with the most valuable block space and the one used to transfer the most value.
Defi: Revenge of the Dex...and more! Decentralized exchanges have changed the way the crypto industry trades, peaking at 16% of centralized exchanges.
The expansion and upgrade of Ethereum is in progress. The first of the Eth2 upgrades -- the Beacon Chain -- went live on December 1, 2020, kicking off the multi-year process of Ethereum's growth into the world's settlement layer.
In 2020, Ethereum reached critical mass. From a high enough vantage point, it's clear that the industry's center of gravity has shifted. This year will be remembered as the year the entire crypto industry began to evolve around Ethereum.
What is the most popular blockchain in the world?"bitcoin"。
the answer is:"For the first time in history, the answer is no"
bitcoin
the answer is:
Hmm...by which metrics?
In 2020, Ethereum surpassed Bitcoin in two of the most important metrics we use to compare blockchains. First, Ethereum is used to transfer the most value.
Ethereum moved about $1.6 trillion worth of assets, 60% more than Bitcoin’s roughly $1 trillion.
Ethereum's most successful application, stablecoins, is the main driver of growth in Ethereum transaction volume. Stablecoins are cryptocurrencies that hold a fixed value in fiat currency (usually the U.S. dollar), and are therefore more useful as a store of value or medium of exchange than volatile assets like BTC or ETH.
Ethereum’s transaction volume has grown throughout the year, and its settlement value has been higher than that of Bitcoin since July.
Second, another key metric used to compare and measure the actual usage of cryptocurrencies is total transaction fees. Every time someone spends Ethereum or Bitcoin (sending funds, or using an app), they pay a small fee. Transaction fees are a useful metric because they show the real demand of paying users."In 2019, total fees paid with Bitcoin were 4 times higher than those paid with Ethereum."In 2020, that flipped. Paying with Ethereum costs almost twice as much as Bitcoin.
Another way is to frame the value of block space. The capacity of each blockchain is limited. For a full year, available for trading
block space
There is only so much. In 2020, Ethereum’s block space is roughly twice as valuable as Bitcoin’s block space.
Notably, even applications built on Ethereum have more paid usage than the entire Bitcoin blockchain. Fees paid with Uniswap were evenly matched with those paid with Bitcoin on Aug. 10, and have occasionally surpassed 24h BTC fees since then.
Of course, by other metrics, Bitcoin is still in the lead. Bitcoin’s market capitalization is still higher than that of all Ethereum-based assets. Moreover, Bitcoin enjoys greater popularity among those outside of crypto.
However, when you look at the actual usage of these platforms, Ethereum is already clearly ahead of Bitcoin, and no other blockchain is within orders of magnitude.
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2. Ethereum’s Maker Economy
Beeple is a digital artist. His real name is Mike Winkelmann.
His work ranges from concert visuals (he's worked with One Direction, Eminem, Justin Bieber, and others) to 3D/motion design work for clients like Apple, Nike, Activision, and more."For 13 years, Beeple has honed her skills and built a huge Instagram following by creating and publishing a piece of 3D art every day."He first heard about Ethereum in 2017, but didn't look closely. Then in the summer of 2020, he noticed that some artists in his industry started selling art on Ethereum.
these artists"Non-homogeneous Token"(NFT) to sell unique digital artwork. And they made a lot of money doing so. In July, Trevor Jones sold a digital artwork for $55,555, a record amount at the time. Beeple decided to try it out for herself.
Prior to this, Beeple's
daily
The income of the work is not high, or there is no income at all. Instead, Beeple's art made money for Instagram and Twitter, which sold ads to his millions of followers. You could say that on these platforms, Beeple -- and every other artist -- is just getting paid in exposure.
Ethereum gave Beeple an outlet for this system. On Ethereum, 13 years of artwork is no longer just the property of Instagram and Twitter, but has become Mike's property. He was able to put his work on an open market and discover its value.
In December, Beeple sold a set of his daily creations for a combined price of 3.5 million, setting a new record for encrypted art sales. During the sale, he sold three versions of the artwork in five minutes for a total of $582,000.
2020 is the year when Ethereum’s maker economy reaches critical mass. If ICOs were the first breakthrough application of Ethereum and DeFi was the second, the maker economy is fast becoming the third.
The tools that help Beeple take ownership of her art are also used by other artists, musicians, fashion designers, writers, and more. But the most pronounced growth has been in crypto art, where the number of people buying and selling crypto art each month has exploded over the past year:
In 2020, the total amount of encrypted art is about 23 million US dollars. While this pales in comparison to the broader crypto market, it is not insignificant compared to creators on other platforms. To give a sense of scale, this early crypto art transaction volume on Ethereum is about 5% of the $500 million Patreon paid creators in 2019.
What makes the creator economy compelling is not the absolute numbers, but the incredible relative value offered to artists. For Beeple, crypto art isn't just slightly better than his previous work. That was a zero to $3.5 million moment.
This is why most of the artists exiting Ethereum are not long-term crypto believers. They were established artists with an established following, attracted by what Ethereum offered: a better way to monetize their work, and a canvas for unexplored experiments.
Just to name a few: Murat Pak, probably best known as the artist behind the Archillect twitter account, has recently started creating and selling NFTs — and explaining them in detail to his followers (Pak’s Niftygateway). Pak’s NFTs have already brought in over $1 million in 2020. Mario Klingemann, who uses artificial intelligence and machine learning to create bizarre and surprising generative art, has also joined the NFT game (Mario's Superrare). Or Joanie Lemercier, whose work ranges from large-scale light protection installations, to climate activism, to screen prints (Joanie's Nifty gateway).
The same toolbox that made Ethereum the cutting edge of art also provides better models for musicians. In the past 6 months alone, musicians have sold over $1 million in NFTs and social tokens.
One of the most outspoken musicians embracing Ethereum is RAC, aka André Anjos. In October, André released a fan token called $RAC. This token is distributed among his existing fanbase to reward them retroactively. People will receive Tokens if they have previously purchased items, or subscribed to RAC on various platforms. $RAC gives its holders access to exclusive privileges, access to new works, and more. Other artists such as 3LAU, Tokimonsta and Portugal. People are trying similar ideas.
Over the past few years, a plethora of maker economy marketplaces have sprung up. Some act as platforms for any type of NFT (Rarible, Niftygateway, Opensea), while others specialize in a genre (for crypto art. AsyncArt, KnownOrigin, MakersPlace, Foundation, and Superrare) or a certain aesthetic, almost like a brand or Tag (Zora). The recently launched Mirror aims to be a user-owned publishing platform, while Cent attempts to tokenize tweets and sell them. Audius, an encryption-based music streaming platform, grew to more than 1 million monthly users in October.
For most of history, the crypto space has been synonymous with money. But Ethereum's boundaries are much bigger than finance. At the same time, the Creative Network is at an inflection point, as artists, musicians, writers, and creators of all kinds grow increasingly resentful of platforms that exclude them, censor them, control their relationship with audiences, and charge a fee for the privilege. The more dissatisfied.
Ethereum's digital frontier is an outlet for these systems.
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3. DeFi: The Revenge of Dex
https://duneanalytics.com/hagaetc/Dex-metrics
In 2018, many concluded that decentralized exchanges (Dex) were a failed experiment.
In this year’s recap, we included a brief note about Uniswap, a new Dex that launched in November. In 2019, Uniswap has grown significantly - daily trading volume has increased by 6,000%.
In 2020, Uniswap was used to trade over $58 billion worth of assets. In September, Uniswap’s trading volume briefly surpassed that of Coinbase. This growth isn’t limited to Uniswap – Dex volumes are growing across the board:
In October, Dex combined trading volume reached a high of 16% of all centralized exchanges (CEX) trading volume.
https://duneanalytics.com/rchen8/defi-users-over-time
This has been another year of incredible growth for DeFi, the Ethereum financial system. DeFi is an interconnected financial service & protocol network being built on the Internet, expanding the use of basic financial services to everyone on the planet. Today, you can use DeFi apps to deposit money, take out loans, make payments around the world, earn interest on assets, or speculate on crypto markets.
In February, DeFi reached the milestone of $1 billion in total value locked within DeFi protocols. By the end of December, it had grown to $15 billion.
And in November, the number of unique addresses that have ever used DeFi protocols exceeded 1 million.
1. In January, Aave launched flash loans. Flash loans allow anyone to borrow an asset, do something with that asset, and pay back the original loan within the space of a single Ethereum transaction. In effect, this makes it possible to offer unsecured loans. The loan and the repayment occur virtually at the same time, which protects the lender from risk - if the borrower can't repay the loan, the loan wasn't made in the first place."mining"This is the decentralization of arbitrage. On Ethereum, if you spot an arbitrage opportunity in the market and you have some technical knowledge, then you can profit from it. You don't need to be an institution with many million dollars to do this kind of arbitrage."2. This summer, Compound introduced liquidity mining — kicking off a protocol arms race. Compound launched a governance token $COMP, users can earn ("mining
), in exchange for adding liquidity to Compound, or borrowing money from it. This strategy was quickly imitated by other protocols, especially very new ones without depositors, who need to
liquidity miner"Offer high interest rates to quickly gain market share."What gets lost in the noise: protocols learning how to steer their own existence using the tools Ethereum provides them, competing with established protocols in a brutal free market.
3. Uniswap started the trend of rewarding past users with tokens. When Uniswap launched Token ($UNI) and its own
Liquidity mining"Incentives, it also distributes 15% of all $UNI to early users of the protocol. This includes users who have previously provided liquidity, as well as anyone who has ever used Uniswap - even once."Different from liquidity mining, this is a new thing. Imagine if AirBnb or Uber gave away 15% of their equity to early hosts, drivers and users. Crypto protocols like Uniswap are experimenting with new models that blur the lines between users and owners. What would the world be like if our most valuable markets were owned by the people who use them?
Package
Bitcoin.
Why are Bitcoin holders moving their Bitcoins to Ethereum? Because on Ethereum, in addition to holding bitcoins, you can also do some things with your bitcoins. You can use your bitcoins as collateral for loans, or lend them out to earn interest. At the beginning of the year, there were about 1,000 "wrapped" bitcoins on Ethereum, and by November, about 154,000, or nearly 1% of Bitcoin's total supply, were put to work on Ethereum.
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4. Increase in the capacity of Ethereum"Eth2"This marks the beginning of a new phase. Over the next few years, the Ethereum community plans to make multiple interdependent upgrades to the core protocol, radically expanding the capacity and security of the network."Eth1 "and"Eth2 ", but that's always been a bad name.
and
Not a sequential version of one thing, but two components of a whole—Ethereum—that will merge together. A broader project is actually a set of separate but related upgrades. The first of these upgrades - the Beacon Chain - was launched on December 1, 2020.
secondary title"PoS"Beacon chain online
ethereum
The consensus system is unique. No other blockchain community prioritizes decentralization like Ethereum - anyone, even consumer hardware, can run a node.
What's next? There are two main tasks in the near future. One is to merge the Eth1 chain with Eth2, and replace PoF with PoS of the beacon chain. The other is to increase data fragmentation, which will open up a new route and achieve instant expansion through rollup.
secondary title"Rollup-centric roadmap"Rollup is a second layer scaling technology. The idea is that we can keep data on-chain while offloading execution to"chain"outside the chain
, moving to an environment that can handle faster performance while still retaining
chain
A characteristic security guarantee for Ethereum transactions. For a detailed explanation, check out Vitalik's guide.
We've launched rollups on mainnet today (although they don't use Eth2 sharding yet). Loopring, Fuel, and zkysnc have enabled ETH and token transfers. All are capable of thousands of transactions per second, with security assumptions similar to those on the Ethereum mainnet.
2020 also saw optimistic rollup launch a testnet supporting Solidity/EVM. In 2021, we'll see developers start porting their apps to optimistic rollup (actually, we're late to this blog post, and we're already starting to see that). As a result, transaction fees for end users will be lower, even as demand for Ethereum block space continues to grow.
If you want to read more about how Rollups fit into Ethereum’s roadmap, we recommend Ben Edgington’s recent article.
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In the early days of PoW mining, before ASICs centralized mining in the hands of large corporations, such communities existed. Readers around 2014-2016 will remember that being able to contribute to network consensus on an individual basis was a big part of the crypto ethos, which has since largely died down. Now, Ethereum is bringing it back.
What does all this mean?
This is another example of what makes the Ethereum community great. People need education, resources, and technical support to help people learn how to successfully set up clients and stake. The largest of these communities is Ethstaker, a community of about 6,000 people on Discord. If you are interested in staking, this is the right place to start.
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What does all this mean?
Ethereum is growing
The digital frontier of Ethereum is no longer an experiment, a blank canvas. It was an economy, a growing city-state. It's an economy, a growing urban state. Of course, it's still rough around the edges. But that's always been part of the charm.
- Josh Stark & Evan Van Ness
