Leading cryptocurrency project Ethereum has seen its fundamentals on the rise lately, as decentralized finance crosses the $1-billion mark this month. That's big news for the project, because Ethereum's native currency, Ether, accounts for about 70% of that total.
In addition, the project is gaining momentum around its ETH 2.0 initiative and it could get a boost from a major move by the big U.S. bank JPMorgan Chase (JPM) - Get Report, which plans to merge its Quorum blockchain with ConsenSys -- a development studio founded by Ethereum co-founder, Joe Lubin. The bank built its private blockchain using the Ethereum network, and if successful, the merger could lead to more investment in the Ethereum ecosystem.
Considered the pioneer for blockchain-based smart contracts, Ethereum also continues to gain prominence as 19 out of the top 20 decentralized finance projects were built on its blockchain.
Smart contracts are computer programs that automatically execute when specific conditions are met. Running them on a blockchain removes any possibility of downtime or third-party interference, making them extremely useful for exchanging money, content, property, shares, or anything of value.
ETH is Ethereum’s native currency, used as "gas" to pay for network transactions. It currently boasts a market cap of just under $30 billion, with a 24h trade volume of $19.77 billion.
The Ethereum platform currently processes transactions in a similar way to Bitcoin. But massive development efforts are underway on Ethereum 2.0, to switch over from its proof-of-work to a proof-of-stake network capable of greater scale. The need for scalability is key as the number of transactions, and subsequent gas prices, continue to rise on the platform.
Ethereum fundamentals have been increasing since the beginning of 2020, up 22-points (2.38%) since January 1st. Our data shows this was driven by a 48-point (5.37%) rise in User Activity.
FCAS is up 22-points (2.38%)
Developer Behavior is up 1-point (0.1%)
User Activity is up 48-points (5.37%)
Market Maturity is up 2-points (0.24%)
Our Hot Take
Current trends suggest that as the DeFi market continues to expand, it will create robust payment gateways for a wide variety of DApps to be built on Ethereum. Any sort of multi-party application that today relies on a central server can be disintermediated via the Ethereum blockchain. This has attracted new capital to flow into ETH, causing price to skyrocket in the past two months.
Starting with the launch of MakerDAO, there are now nine separate Ethereum decentralized finance apps holding at least $10 million worth of cryptocurrency in them. As Synthetix founder Kain Warwick commented, “The idea that Ethereum is replicating these traditional financial applications on a decentralized platform has finally crossed the chasm and got to the point where people understand it."