Since its inception, the open-source, public blockchain Ethereum has been incredibly popular. Swathes of people have made serious gains trading its native coin ETH, and although it may not be at record levels in regards to token price, there’s never been a better time to trade it.
Right now, a series of factors are lining up that will undoubtedly encourage the price of Ethereum to explode. The Ethereum network has long been a place where innovative projects could develop and grow but in 2020 the capacity for this growth is unparalleled.
One of the most attractive aspects of the Ethereum network is its ERC-20 tokens. Developed by the community, these tokens are designed for sole use on the Ethereum network and enable limitless decentralized applications (DApps) to operate on the Ethereum blockchain.
What does this have to do with DeFi? DeFi is short for decentralized finance, a movement that is taking the crypto world by storm. DeFi projects turn existing financial products, like currency exchanges and lending or borrowing facilities, into trustless, decentralized protocols. And the foundation of this phenomenon is the Ethereum network.
Almost all DeFi projects rely on ERC-20 tokens, and as a result of the success of DeFi, some analysts believe up to 50 percent of Ethereum’s value now exists in ERC-20 tokens. For a relatively new phenomenon, the numbers are staggering. As of today, an estimated $10.93b (USD) is locked up in DeFi projects.
From October 2019 to October 2020, Uniswap—a leading DeFi project—went from holding $12.7m (USD) to $2.3b (USD). And the popularity of DeFi projects show no sign of slowing down.
Moving away from ERC-20 tokens and back to the Ethereum blockchain, there is another major development due this year that will see the importance of ETH sky-rocket: Ethereum 2.0 (Eth 2.0). This major upgrade of the Ethereum blockchain has been five years in the making.
Essentially, Eth 2.0 will be the largest, most ambitious upgrade of a blockchain in history, and all Ethereum users will be transitioned over to it. The final testnet, Medalla, was announced back in July and the Eth 2.0 mainnet was launched on 1 Dec 2020. But what’s so important about it?
Stage one of Eth 2.0 is the development of a new blockchain network called the beacon chain which is powered by proof-of-stake. Anyone with 32 ETH or more can earn interest on their assets by adopting the beacon chain.
Once all phases are rolled out, Eth 2.0 will be faster, more scalable, and more efficient than its predecessor. One of the key bugbears, the price of “gas”, will be dealt with and gas costs on Eth 2.0 are expected to be much lower. This will make it much cheaper to trade ETH and interact with smart contracts which should in turn boost adoption.
All of these developments are likely to increase the value of ETH and encourage more DeFi projects to launch on the network, making ETH an ever more attractive trading option.
Here at C-Trade, we are always up to date with the latest developments in the crypto space, and the growing importance of Ethereum is no exception.
That's why we are introducing ETHUSD perpetual contracts to the C-Trade exchange, so our users can benefit from Ethereum’s increasing success. As we've explained, Ethereum is on the up and ETHUSD perpetual contracts are an incredibly good trading option.