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Sirwin

Understanding the rush to move to Ethereum's token world

By paragism | paragism | 15 Dec 2020


Ethereum blockchain went live on 30 July 2015 and since then we’ve seen a lot of use cases. Vitalik Buterin along with other core developers created Ethereum with a goal of building decentralized applications. Vitalik argued in his whitepaper that blockchain needed a scripting language for developing applications so that any kind of assets or property could be attached to it. Ethereum’s dominance in the smart-contract blockchain is undeniable today. Numerous applications are being developed continuously on the platform. Ethereum is definitely the DAPP layer but it also has a ‘programmable value’. The value proposition of Ethereum is increasing due to its automatic selection as the ‘settlement layer’.

“The key to the settlement argument is that one blockchain serves as the global settlement layer for all those data transactions, no matter on which blockchain they occur. The settlement layer provides an ‘anchor’ for the ecosystem, establishing undeniable security and objective finality should anything happen on a different blockchain that requires arbitration.” – Consensys Research post

Ethereum as the settlement layer

With the recent popularity of decentralized finance or DeFI, Ethereum has become the global settlement layer for a decentralized world economy. A Messari report of July’20 displayed that Ethereum surpassed Bitcoin as the network that settled most values per day. With the popularity of DeFi, stablecoin transactions are rising enormously on Ethereum. ERC20 token assets are growing exponentially on the blockchain. Several AMM (automated Market Making Protocol) based Ethereum DEXs are doing fantastic jobs nowadays. Uniswap, Sushiswap are challenging top centralized exchanges as per their daily trade volumes and allowing permissionless token listings.

The big guns moving to Ethereum

Telos is a major smart contract blockchain running on EOSIO software. Earlier this year, they launched Telos EVM, the first deployment of an Ethereum Virtual Machine on the EOSIO blockchain. Telos is 700 times faster than Ethereum and has great support of EOSIO developer community.  In a very recent blog post, they talk about TULIP (Telos Uniswap Liquidity Implementation Plan). It identifies low liquidity of TLOS token as a big problem and clearly states that they lack funds for big exchange listings. They want TLOS to be listed on Uniswap where no listing fee is required and it can provide them with very high trading volume.  To be on Uniswap, they will create an Ethereum wrapped TLOS token. They expect TLOS ERC20 tokens will receive 2.5-3 times more value than the original cryptocurrency which is being actively traded since the last two years. Their detailed blog post says, “however, the real money and activity is on Ethereum and that market will not come to Telos in large numbers until we create bridges and enticing dapps. If Telos wants to benefit from the high liquidity that Ethereum offers, we need to go there.” They are taking inspiration from Katalayo, a Telos DAPP which raised over $1M USD by performing a massively successful presale of Katalyo on Uniswap after the creation of a large liquidity pool. Katalayo achieved over $5M USD volume for the ETH/KTLYO swap pool on its first day of Uniswap listing through organic trading.

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Image Source: The TULIP plan – a sequence of liquidity events of Telos

Some days back, Golem, one of Ethereum’s first ICOs, migrated to the ERC20 standard. They stated that it needed to be more scalable. The project really was an investor eye candy in 2016-17. Golem has a marketplace for unused computational resources and people are rewarded with crypto assets for sharing computational power. New Golem’s transaction framework is based on Layer2 of Ethereum. GNT has been replaced with ERC20 GLM. GLM will get exposure to be part of the high-velocity DeFi game.

Ethereum Classic Labs, a big supporter of ETC blockchain, released Wrapped ETC (WETC) in the last month. It is an ERC-20 token and it has been created to allow ETC holders to take part in Ethereum DeFi. The event is noteworthy if you consider the fact that ETC is the original classic Ethereum chain and the present Ethereum is the result of a hard fork after the ‘DAO hack’.

WBTC (Ethereum wrapped BTC) has $2.22B locked volume on Ethereum DeFi and it is the number one DeFi asset now. ZEC has already made its debut on the DEX ecosystem of Ethereum in the form of wrapped zcash (WZEC). Huobi Global has released its ‘H-token’ series (includes Litecoin and Bitcoin SV) to take advantage of the DeFi ecosystem with a broad range of collateralized Ethereum wrapped assets. H-tokens are supposed to act as a bridge between centralized and DeFi markets. Filecoin was a hot ICO project of 2017 and they got listed on many top exchanges after their mainnet launch in this year. WFIL (wrapped Filecoin) came to the picture some days back. It connects Filecoin to Ethereum and acts as a lever to enhance its adoption through DeFi liquidity. WFIL is backed by Filecoin deposits on a custodial wallet.

Financial engineering needs innovation. Bitcoin is the value layer but definitely not the settlement layer. The Ethereum community is excited to declare that Ethereum is the final settlement layer whereas many are tagging this as ‘maximalist’ thought. But this settlement game doesn’t actually promote maximalism. Ethereum isn’t engulfing other blockchains. It is providing inclusion to the others and acting as the financial internet. The blockchain of Ethereum can work as a decentralized root chain and the other blockchains can co-exist. Tokenization of different cryptocurrencies on Ethereum is a viable way to bring interoperability, market penetration and value settlement. The value is accruing there red hot. Let’s embrace the asset serving function of Ethereum. 

Note: This post was first published here for Cryptowriter in association with voice.com.

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paragism
paragism

Cypherpunk. Writing content which I love. Creeping on the blockchain. Twitter - @paragism_


paragism
paragism

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