Ethereum Showing Signs of Life as ETH Price Up $35 USD in Past 3 Days
For the first time in forever, Ethereum has shown signs of life, reminding many of us that it’s still here. Despite going dark for nearly 1.5 years, the world’s number two digital asset is picking back up on a stride it lost long ago.
Let’s pull back the curtain and take a look at why Ethereum appears to be back in favor, and what that might mean for its mid-term prospects.
Tether (USDT) is tying up Ethereum, but that’s a good thing
At the beginning of the year, Tether’s handlers declared they would be moving USDT from Omni to the Ethereum blockchain. Tether does upwards of $15 billion in daily transaction volume, and is itself worth $4.1 billion (hopefully) cash-backed USDTs.
Suffice to say that is a ton of network strain heading straight for the Ethereum blockchain. As the year progressed, Ethereum gradually started showing signs which belied that strain. This month, transaction wait times have resembled those of the Crypto Kitties days, with some users waiting days for transactions to finally confirm.
The huge boost in network activity caused by millions of Tether transactions has led to near ATH gas fees. In response, Ethereum miners have moved toward increasing the gas limit, which would create more transaction throughput.
It’s easy to point out that Ethereum is struggling to meet the demands of Tether’s move, but that doesn’t tell the whole story. In our view, we’re witnessing the beginning of Ethereum-based decentralized finance (DeFi), a much touted but hitherto unseen network potential.
With real value moving onto the network in a permanent way, the emergence of demand for the Ethereum world computer comes as a relief. While other smart contract platforms have thrown their hats in the ring, it’s probable that high-stakes products like USDT will continue to choose a tried and true platform like Ethereum.
Ethereum 2.0 on track
On June 13, developers reiterated their belief that Ethereum 2.0 is on track for a January 3, 2020 rollout.
As outlined in our recent analysis, ETH 2.0 will appear in several phases. Phase zero, which comes as the first most important implementation, will feature the launch of the proof of stake beacon chain.
A switch to proof of stake will also mean lower gas fees and high transaction throughput, which should go some ways in ameliorating the aforementioned USDT situation.
Additionally, Binance recently published a report showing Ethereum’s sheer dominance when it comes to hosting decentralized finance applications. EOS and BTC, the next closest competitors, have a lot of catching up to do. Ethereum outdoes them by hosting over 15x the amount of DeFi apps.
From a network usage perspective, that’s a bullish sign for the future because DeFi apps use more complicated-than-usual smart contracts which, in turn, require more gas.
Resources for watching Ethereum
The beautiful thing about blockchain is that network metrics are always available for you to see if you know where to look. Here are a few very handy resources for observing network usage, gas fees, network utilization, and more: