Ethereum’s Ratio Breaks Support

By October 28, 2020DApps
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Eth bitcoin price, October 2020

Ethereum’s value against bitcoin has fallen by 22% since last month, with it breaching that support level of 0.03 this Tuesday.

One eth is now worth 0.029, significantly below the 0.37 it reached in September of this year.

Since then, eth’s value against bitcoin has been falling as can be seen above, with it most notable yesterday and today.

While bitcoin rose to $13,800, ethereum rose a bit to $410, but not quite by the sam extent.

While today eth fell to $394, bitcoin just dropped by $100 or $200. Translating to overall bitcoin rising by 14% this week, while eth has gained “just” 7%.

Ethereum was leading for much of summer due to the decentralized finance (defi) boom.

Eventually it was going to give way, with bitcoin now running the show due to its own factors, but also because eth investors appear to be a bit frustrated by a surprise delay of the ethereum 2.0 deposit contract.

Just what happened there is not too clear, but the ethereum 2.0 coordinator, Danny Ryan, himself said the launch was still imminent, then a day later he announced there’s a blocker due to the audit of a cryptography library they using for key management in eth 2.0.

That there was such audit and that its completion was needed presumably was no secret to the devs working on this, but clearly communication is lacking here, presumably even among devs.

This is important because it may well indicate what ethereans should expect in regards to the other two phases.

Initially there’s just a dumb Proof of Stake (PoS) eth 2 blockchain which does nothing but “watch” and within its own system validate the current Proof of Work (PoW) blocks.

The eth on the PoS network can not be moved until phase 1.5. Before phase 1.5, there’s phase 1, which is storage sharding.

Sharding is of course a very complex matter, and so our estimate for phase one would be sometime in 2022 at best.

For the merger there’s suggestions this can be done easily, but depositors should expect their eth will be locked for at least two years and with surprise delays, maybe three years.

Because of this very different timeline from what was expected, ethereum and bitcoin are kind of the same, except eth has defi now but you can tokenize bitcoin to access it and some parts of defi are not great for eth.

Impermanent loss for example means that if the price of a token falls in the eth/token pair, then eth is sold to buy the token, meaning it brings sell pressure on eth.

However, eth might have one advantage in zk tech. Because it has smart contracts, compressing transactions through zero knowledge technology and linking them to off-chain account keeping while proving on-chain all is valid, is a lot easier on eth than in bitcoin.

Bitcoin devs are not sitting idly. This is all code, all should remember. But for now eth has an advantage if they can grab it.

Grabbing it for once is on the hands of dapp devs, rather than the protocol ones in the dysfunctional Ethereum Foundation.

There are signs such dapp devs are already moving towards implementing zk tech in particular, with our out there view being eth might look a lot different a year from now and so quickly because there are significant competitive pressures here.

The protocol devs are organized in a communistic way. They deliver, great. They don’t, they don’t care, they still get their paycheck.

The dapp space however, especially in defi where there is a business model, is under the pressure and the accountability of market forces.

It is ruthless capitalism where the weak perish and the strong expand. So whether these dapp devs delay or not, no one cares because there’s money to be made and you’d think there are plenty of people happy to grab such money by copy pasting the already published smart contracts to then add a zk booster to it.

Naturally such things can’t be rushed because we’re dealing with crypto money, but unlike in communistic protocol development where committees decide timings and when something is ready, here it’s the market deciding it.

So Vitalik Buterin maybe wasn’t wrong afterall. The race to zk tech may well be now the more interesting theme in ethereum.

One eth is now worth 0.029, significantly below the […]

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