Cryptocurrency

Legitimate factors: New 12 months, new prizes for ETH

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Bullish price activity has brought the total value of ETH tied into Ethereum 2.0 down to over $ 2.4 billion. Find out what other network metrics have been impacted by the recent price increases for Ether.
https://www.coindesk.com/new-year-new-price-gains-eth

It's safe to say that 2021 is a good start for Ethereum.

Since the start of the new year on January 1, the price of Ether (ETH), the network's native cryptocurrency, has risen 48%, surpassing the $ 1,150 threshold for the first time since January 2018.

With Ethereum 2.0, a higher ETH price means higher income for validators. However, this also means a higher barrier to entry for users who want to become new participants in the network by purchasing and depositing 32 ETH.

(Data from January 5th, 2021 at 18:20 UTC)

Source: Etherscan

While the rewards achieved by the Ethereum 2.0 validators have stabilized at around 0.008 ETH / day in the past two weeks, the market value of these revenues has increased further from around USD 5 to now USD 8 / day. Bullish price activity also caused the total value of ETH, anchored on the network on January 5, 2021, to exceed $ 2.4 billion.

As of last Wednesday, December 30th, over 1,000 new examiners have added funds to the Eth 2.0 Deposit Agreement, all of which will be earning rewards in a matter of weeks. The validator queue is currently at 17,425, meaning anyone who now joins Eth 2.0 at 32 ETH (valued at around $ 32,646 at the time of writing) will have to wait up to 20 days before doing anything on the network can.

Number of new Ethereum 2.0 validators

Source: Glassnode

For the 51,000 already approved examiners, the vast majority of these participants make full use of their roles, which propose, certify and vote for blocks. The network participation rate, which measures the percentage of authorized validators who are online and actively contribute to the further development of the blockchain, has been constant between 96% and 99% since mid-December.

The CoinDesk Eth 2.0 validator isn't one of those active validators just yet, but we will soon be! More information about our setup in the next few weeks.

New frontiers

On Monday, one of the bullish arguments for Ethereum as a platform and asset (ETH) was made by none other than a federal regulator.

According to the Office of the Currency Auditor (OCC), national banks and federal savings banks can now use public blockchains as processing mechanisms – especially for stable coins.

The news was spearheaded not only by some of Ethereum's highest gas fees in the last calendar year, which saw the bulk of the dollar circulating in the $ 30 billion stable coin market, but also by a huge one-day jump in the price of ether (ETH)). The asset surged around 30% to over $ 1,000 for the first time since the 2018 bull.

What does this mean for Ethereum? The demand for blockspace on Ethereum is high, as is the demand for ether, the asset. Some of the recent price movements can be explained by institutional pressure, Antoni Trenchev, co-founder and managing partner of Nexo, said in a statement.

“Ethereum at USD 1,000 is not a nine-day miracle. With Bitcoin prices skyrocketing, institutional investors are finding it difficult to diversify their portfolios, ”he said.

But it's not all FOMO. According to Money Movers, the ether has risen to parity in terms of daily billing or has even outperformed Bitcoin (BTC).

This is good for the network, even if the frustration with decentralized finance (DeFi) is degenerating, as Nic Carter, co-founder of Castle Island Ventures, pointed out in a recent statement from CoinDesk.

In summary it can be said that the use of the "world computer" costs ether, which will lead Ethereum to the most productive activities. Stable coins are likely one of these activities because of the cryptographic advantage (such as verifiability and lack of authorization) of any dollar-pegged token over current digital alternatives. If this is not possible, either another blockchain will take its place or the idea of ​​the private dollar will have to find another means of market entry.

A surge in stablecoin activity is a possible outcome of the recent OCC guidelines. Is Ethereum ready to process billions of dollars in assets, contracts and users of stablecoins and become a competitor to ACH and SWIFT?

The short answer is no. This is why Eth 2.0 – a project that began before the Ethereum Genesis block was dismantled in 2015 – is so important: Without a scaling solution, Ethereum cannot become a platform for decentralized applications (dapp), let alone for financing.

With this in mind, betting on Ethereum and Eth 2.0 is an investment in public blockchains that support various economic activities like stable coins.

"Unlike BTC, however, ETH lacks a digital gold history and is instead a new target for a different breed of institutional investor – one interested in their long-term technological promise that was revived with the introduction of ETH 2.0," said Trenchev.

Validated takes

  • What's new in Ethereum 2.0 (HackMD-Post, Ben Edgington)
  • Ether price tops $ 1,150, hitting its highest level since January 2018 (Article, CoinDesk)
  • Looking back on a monumental year for crypto (Article, CoinDesk)
  • NFT art sales hit an all-time high of $ 8.2 million in December (Article, CoinDesk).
  • Monthly Crypto Market Review December 2020 (Report, Kaiko Research)
  • Review of 2020 (blog post, Quantstamp)
  • What is annual funding? (Video, The Defiant)
  • Endnotes for 2020: Crypto and Beyond (blog post, Vitalik Buterin)

Factoid of the week

Factoid of the week January 6th

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Very soon, we'll be including data directly from CoinDesk's own Eth 2.0 validation node in our weekly analysis. All profits from this stake will be donated to a charity of our choice once the transfers are activated on the network. A full overview of the project can be found in our announcement post.

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Melinda Martin