Ethereum Economy’s Market Cap Soars to Over $250 Billion: Coinbase Report
“Think of ETH as being like the visible part of an iceberg. Because the Ethereum blockchain is so flexible, vast economic activity is happening just under the surface.”
US-based cryptocurrency exchange Coinbase covered Ethereum this week, explaining to its users how the smart contract technology that is igniting the NFT (non-fungible token) mania is also fueling a new, decentralized alternative to the current financial system.
This alternative system designed to economically empower individuals allows the flow of capital through open-source protocols that are faster, cheaper, more transparent, and available to all.
Ethereum, however, “isn’t just another form of digital money,” says Coinbase rather a blockchain that was “created to be a highly versatile decentralized computing platform.”
Much like Bitcoin, Ether has surged both in price and popularity.
As a matter of fact, ETH’s price has grown faster than Bitcoin since the beginning of 2021, which in part is driven by a flood of retail investors who have extra time and discretionary income on their hands due to the COVID pandemic, noted the exchange.
“Think of ETH as being like the visible part of an iceberg. Because the Ethereum blockchain is so flexible, vast economic activity is happening just under the surface — in the form of Ethereum-powered crypto categories including DeFi, stablecoins, wrapped tokens, and NFTs.”
Collectively, the Ethereum economy’s market cap, which covers the total market cap of the biggest ERC-20 tokens issued on top of the Ethereum blockchain, not including NFTs, has soared in recent weeks to more than $250 billion.
In 2020, Ethereum processed $874 billion worth of dollar payments in 2020, rivaling major consumer-facing systems like Zelle ($307 billion) and Paypal ($963 billion) but still far off of Fedwire ($840 trillion).
While the broader crypto boom is driving this recent activity, another reason is the internet-fluent “memestock” investors of Reddit who are frustrated with the traditional financial system seeking less-centralized alternatives and finding it in DeFi.
The DeFi landscape is made up of apps that “aim to become speedier, more efficient alternatives to the inefficient, slow, and often expensive pipes that capital flows through in the current financial system.”
The Ethereum economy has also caught the attention of major financial institutions such as PayPal, Visa and through Grayscale, and CME.
All this traction and usage has sent the fees and congestion on the network skywards. And the community is now working on the long-planned transition to a faster, cheaper, and theoretically even more secure Ethereum 2.0 (or ETH2) blockchain.
ETH 2.0 first began rolling out in Dec. 2020, and now nearly 3.2 million ETH are staked in its deposit contract. Coinbase states,
“At the end of this multi-year upgrade, the Ethereum economy should be one big step closer to fulfilling its potential of making financial transactions of all kinds faster, cheaper, and more accessible.”