[I don’t want to write a prologue but this is the second part of the article. Here you can find the first part of the article.]
“What Ethereum intends to provide is a blockchain with a built-in fully fledged Turing-complete programming language that can be used to create "contracts" that can be used to encode arbitrary state transition functions, allowing users to create any of the systems described above, as well as many others that we have not yet imagined, simply by writing up the logic in a few lines of code.” – Ethereum Whitepaper
Satoshi Nakamoto created Bitcoin in 2009. It was the first decentralized peer-to-peer currency implemented in practice and it was based on various cryptographic primitives. The idea of creating money through solving computational puzzles existed earlier but Satoshi gave it flying colours. Bitcoin inspired numerous cryptocurrency projects later on. Ethereum was unique because it came up with a ground-breaking idea to provide an internal scripting language. Ethereum’s design philosophy doesn’t allow Ethereum to have features. The protocol is characteristically simple but robust. Significantly it is modular, separable and agile. Want to build anything under the sun? Ethereum is easy to grab for that. This is the reason, it became the favourite blockchain for the developers. There have been numerous code alterations to scale up Ethereum in the past. Now, Ethereum is going to shift from PoW to PoS algorithm.
ETH 2.0 effect
ETH 2.0 deposit contract was launched some days back and it is the first physical implementation of Ethereum 2.0. To trigger genesis, there must be at least 16384 32-ETH validator deposits 7 days prior to December 1. It’s difficult to predict whether the deposit contract will reach the magic figure on time or not. It’s important to note that ETH 2.0 deposit contract is a one-way contract i.e. ETH isn’t extractable from the contract now. Your ETH is placed as collateral to earn staking rewards. You need to stake 32 ETH to run a node to strengthen the blockchain’s security. The staking APY should be 8-15% now. ETH is moving out from the exchanges slowly after the launch of the deposit contract. Phase 0 success rate is only 20% now and a lot of ETH will move out gradually. The signal is bullish.
Image Source - The amount of ETH held in all exchanges' wallets (the chart says all)
yETH strategy effect
Yearn.Finance deployed its yETH strategy, a single asset fund strategy on Ethereum some months back. yETH is a tool which enables the investors to earn automatic yield across DeFi protocols when they stake Ethereum holdings. The yETH vault currently takes ETH deposit from you, borrows DAI with your Eth from MakerDao, deposits DAI into Curve and then earns CRV + Trading fee. ETH is basically used as collateral to mint DAI for yield farming. The yield is attractive and it encourages the investors to deposit more and more ETH into the vault. Again, this is a bullish signal for ETH.
Enough! Tell me about price movement
The traders are interested in price. Let’s discuss ETH price movement. ETH has gained heavily this year. YTD return of ETH is more than BTC against USD. The Internet is already flooded with parabolic price projections for ETH. The crypto market is full of FUD and 99% price projections are wrong. Let’s look at one important aspect of ETH/BTC price movement. The below-mentioned chart shows the weekly moving average of ETH/BTC for the last 5 years. ETH/BTC found a bottom every year during November-December and rose up during January-February. This year also ETH/BTC found a bottom in the curve while Bitcoin market dominance increased abruptly. Every altcoin literally dropped vs. Bitcoin. It is really debatable whether we’ll be able to see an ‘Altseason’ or not but ETH is showing recovery cues in ETH/BTC pair. ETH 2.0 Beacon chain launch is supposed to be triggered in the first week of December. A sharp movement can be expected soon.
Chart from Tradingview
The increased adoption of DeFi is a potential precursor of the exponential growth of Ethereum. More than 200 prominent defi projects are there on Ethereum and many more are going to be added down the line. Ether is the go-to-currency in DeFi. The smart contracts on Ethereum are the next-generation financial factories. Whenever anything is built on Ethereum, it adds value to Ethereum. The value transforms into store-of-value. Will it sustain? Increased adoption rate is a signal of sustainability only. More and more people are being exposed to Ethereum and it has the lovely characteristic of assimilating everything which comes on the way. Ethereum’s beauty is its free form. The gigantic computational power of Ethereum is being designed to explode over a time if you trust the creative minds behind it. Ethereum isn't fintech but fintech is Ethereum. Ethereum won't stop here. Wait to celebrate the next epoch-making use case Ethereum.
Note: This post was first published here for Cryptowriter in association with voice.com.