Ethereum - The calm before the price storm

Ethereum - The calm before the price storm - 0 NnkTqghWSMhw 0S 1024x538The importance of ICO, DeFi and NFT highlighted that Ethereum maintains its supremacy as a platform for smart contracts, also showing a strong demand for improving the efficiency of its network. 

Ethereum possesses the first mover advantage and on-chain data and the Ethereum community consensus catalog as a catalyst network to make blockchain and off-chain integration workable. The EIP-1559 update is therefore a factor that amplifies investor interest.

Updates for the better

The initial hypothesis of turning Ethereum into a proof-of-stake network was met with criticism from miners, who saw the development as an injustice to their involvement. However, Vitalik Buterin stressed the value that Ethereum's deflationary stance will have on Ethereum's future, incentivising further participation in the network by miners.

The Beacon chain, or ETH 2.0 dashboard, shows that a total of 7,2 million ETH is currently staked on the network. Additionally, the network has burned 110.000 ETH since the release of EIP-1559, transforming ETH's position in the market as supply and demand interactions change.

Bullish chain data

Ethereum has posted gains of 355% year to date in its quotation, which has led investors to reconsider their investment choices. Grayscale and other investment funds have opened Ethereum and other ERC20 token trust funds, increasing investor exposure to the currency, particularly in the United States.

According to Bloomberg, Ethereum contracts are trading at an 8,37% premium compared to Bitcoin's 6,58%. Furthermore, the on-chain data shows that Ethereum outperformed Bitcoin in terms of total volume traded.

The other side of the coin

The Ethereum network was forced to fork after a bug hit 50% of clients.

The value of an ETH is still speculative because it depends on how much others value it.

Activity on the Ethereum network has increased with NFT transactions on OpenSea surpassing those on the DeFi Uniswap platform, as Anton Bukov's tweet illustrates a noticeable difference in trading volume. Therefore, with Ethereum at the forefront of every new blockchain trend, it can be argued that the network has intrinsic value as it fosters a new form of off-chain connectivity.

Crypto Kuant's Ki-Young Ju highlighted in a tweet that Ethereum is “closer to ATH than BTC” due to the same interactions that have helped Bitcoin reach new highs: scarcity and demand. Similar topics prevail on social media, which further indicates the possibility of the flippening happening much sooner than expected.

While other smart contract platforms are rightfully challenging Ethereum's network hegemony, it's worth noting that Ethereum's first-mover benefits are complemented with a higher LTV and use cases. While Solana could pose a threat to Ethereum, platforms like Cardano have yet to integrate their smart contract functionality.

Why should you worry?

Market valuations should be reflected in the use case the network adds to the entire blockchain ecosystem. Bitcoin has turned into a store of value, while Ethereum is becoming a platform used to secure digital transactions. As technology innovates rapidly, this is unlikely to be the ranking in 10 to 20 years.