The Battle of Ethereum: These factors push ETH to a new record high
Editor's note: This article is from Babbitt Information, author kyle, and is reproduced with authorization.
After a downturn in the entire cryptocurrency market, ETH has surged to new all-time highs on the back of many important events and indicators. Overall, 2021 will be a pivotal year for the Ethereum blockchain as Ethereum developers will continue to work on network integration with Eth2, which will see Ethereum part ways with the PoW it is currently using and move to Instead, it supports energy and cost efficient PoS.
While the technical details may not concern many everyday Ethereum (ETH) users and traders, ETH's recent price action, along with a number of major events, suggest that the impetus that led ETH to its all-time high in late May will continue for some time to come .
The price of ethereum, which is also the world's second-largest cryptocurrency by market capitalization, has risen about 15% in the past week, reaching a record $312 billion. On May 1, the price of ether continued to rise amid news that the European Investment Bank would be conducting a “digital bond” sale on the ethereum blockchain.
The bonds have a sizeable value, worth about $120 million over two years, with financial services heavyweights Goldman Sachs, Santander and Societe Generale managing the bonds. Best of all, the bonds are registered directly on the Ethereum blockchain.
By the end of April, the Ethereum ecosystem has ushered in another milestone. Major decentralized financial platforms Uniswap, Compound, Maker and other leading projects are working hard to break the net value locked in smart contracts on the Ethereum blockchain to 73 billion Dollar mark. This marks an increase of $18 billion in one month.
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1. Comprehensive considerations
Analysts seem to agree that a combination of factors influenced Ethereum’s recent all-time high. Simon Peters, market analyst at eToro social trading platform, told Cointelegraph that the popularity and success of DeFi platforms and other Ethereum-powered applications and use cases is driving institutional investors to gain exposure to Ethereum. He said: “This is the demand of institutional investors, while they may have some exposure to bitcoin now, institutions are now diversifying their exposure, and ethereum is the natural next choice.”
Johannes Rude Jensen, product and project manager at eToroX Labs, further highlighted EIB’s Ethereum-based bond issuance as an important milestone in the adoption of blockchain technology in traditional banking. Jensen told Cointelegraph that blockchain-based bond issuance is gaining attention as a climate-friendly solution to mimic the costly settlement process in traditional bond markets. “By choosing Ethereum, the EIB signals its intention to play an increasingly active role in perpetuating the EU’s climate and innovation policies, in line with the ECB’s recent emphasis on green banks,” he said.
Jensen agreed, with the move heralding a future in which large banks and financial institutions use public blockchains for more traditional financial products. This further demonstrates the general trend towards open standards in corporate banking:
"Having a single, unified source of data on the bond market will reduce reliance on intermediaries, which may reduce costs and support risk mitigation during the pre-issuance and post-trade processes."
Jordan Stoev, head of encryption and transactions at financial services provider Skrill & Neteller, emphasized that Ethereum's users and active wallets are at an all-time high, which is evidence of "a strong network effect in the ecosystem," leading to higher gas prices and a market value for ETH. Stoev told Cointelegraph that the growing popularity of DeFi platforms and decentralized applications is an important factor attracting investors to invest in Ethereum:
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2. Hard from LondonFork upgrade goes one step further
The recent Berlin upgrade introduced several important Ethereum improvement proposals to the Ethereum blockchain protocol, and Ethereum’s move towards PoS continued to move forward this month.
Since Berlin went live on April 15, the ecosystem has had some time to assess the effects of the four EIPs that form part of the latest upgrade. Ethereum analyst Viktor Bunin told Cointelegraph that EIP-2929 will ultimately “guarantee the size of the largest Merkle proof required to verify a particular block,” but ultimately aims to achieve two main goals.
According to him, “It mitigates Ethereum’s largest DoS attack vector, where an attacker can slow down the network by sending transactions that access storage, which are very cheap to process but take a long time for nodes to process.” time.” Bunin further added that ultimately, “this EIP brings us closer to stateless clients, which will enable devices like mobile phones to interact with Ethereum trustlessly without running a full node.”
Bunin also added that the gas cost changes accompanying EIP-2929 could adversely affect certain smart contracts that rely on previous gas cost data. ConsenSys’ Mattison Asher, who works on ethereum, NFTs, and decentralized finance, highlighted EIP-2930’s role in balancing the gas growth caused by previous EIPs, telling Cointelegraph:
"EIP-2930 mitigates some of the gas increases resulting from EIP-2929 by introducing a transaction type that contains an access list, a list of addresses and storage keys that the transaction plans to access. Accessing these variables will be faster than accessing the list Inexpensive variable. Effectively reduces some of the potential gas increases in EIP-2929."
The next proposal, EIP-2565, will also introduce some fee reduction measures for certain cryptographic functions. As Bunin explained, this will make it cheaper to perform functions such as signatures, verifiable delay functions, SNARKs and other implementations. Asher summarized the importance of this EIP in reducing the gas costs associated with the many functions needed to exploit and build upon Ethereum.
EIP-2718 introduces a way to speed up support for different transaction types. This is a useful improvement that will radically reduce the complexity of certain smart contract transactions and their parameters. Bunin added:
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3. Lay an important foundation for the integration of Eth2
The community often has a noticeable reaction to the latest improvements to the Ethereum protocol, but ordinary users are unlikely to notice much change in the way they use ETH or interact with the blockchain through normal transactions.
As Bunin told Cointelegraph, the changes brought about by the four EIPs may take some time to be developed by ethereum developers on various Dapps that may take advantage of the new proposals. “One transaction type proposed is the Layer1 multi-signature type. Bitcoin has this capability, but Ethereum does not, so multi-signatures can only be created on Ethereum through smart contracts such as Gnosis Safe.”
Nick Johnson, lead developer of Ethereum Naming Service, a wallet naming tool, told Cointelegraph that an important feature of EIP-2929 in the gradual transition to Eth2 will "make" stateless Ethereum "more viable". A stateless approach is a key part of the Eth2 roadmap. "
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4. The heat of the upcoming London hard fork is rising
The Berlin hard fork was implemented with little reaction from the wider cryptocurrency community. According to Bunin, this is mainly because the upgrade does not contain any disputed EIPs, unlike the looming ethereum London hard fork, which included the divergent EIP-1559. According to him, “This will change the way users pay for gas, which will improve the user experience and start to burn a portion of transaction fees. Around the same time, Eth2 will undergo its first upgrade called Altair.”
Bunin examines upcoming changes to the Ethereum network in his latest update on Bison Trails. The key takeaway is the 3.5 million ETH locked in Eth2 smart contracts, currently worth about $6.5 billion, or 3% of all ETH in circulation. There are currently 110,000 validators and counting.
Johnson specifically emphasized the impact of the London hard fork on transaction fees and the importance of upgrading smart contract functionality. “It will also make it possible for smart contracts to capture a ‘base fee’, the gas cost of the current block in effect, which will enable things like gas price derivatives and tokens.”
In a communication with Cointelegraph, Sajida Zouarhi, senior product manager for the Besu mainnet client at ConsenSys, outlined the next steps in Ethereum’s evolution and positive progress towards Eth2. “The next step is the London hard fork. Notable EIPs are EIP 1559 (Basefee) and EIP 3238 (Ethereum difficulty bomb delay), which will then lead to “mergers and shards, the transition from PoW to PoS for Ethereum” . She added:
"The goal is ambitious, but all core developers are committed to it. Multiple client teams including Teku and Besu have implemented early prototypes. We are currently testing it on a cross-client devnet .Things are moving fast and looking good so far."
Bunin’s final bullet highlights the overall stability of the ethereum network — despite high fees driven by the nascent DeFi space and increased network usage amid an ongoing bull market — as a sign of the ethereum network’s gradual shift to being PoS-based signs of the future. "Eth2 is moving fast, 2021, as multiple efforts are underway to get us into Eth1 and Eth2 mergers as quickly as possible."
