Ethereum’s network has single-handedly changed the blockchain scenario in 2020. Well, it might not be that single-handed(More like DeFi handed), but its utilization has been off the charts. With the explosion of DeFi, the hype surrounding the development of ETH 2.0 and the overall price turbulence, has collectively put Ethereum under everyone’s attention.
Recent data from Etherscan also suggested that the number of daily transactions on the Ethereum network surpassed its previous high on September 17th, when the total number of transactions reached 1,406,000. The previous high was clocked in January 2018, with 1,350,000 transactions.
It is fair to say that the on-going development is largely due to the fact that DeFi applications have taken over, surmounting close to 9.70 billion in Total Value Locked(USD) at press time.
However, the growth of Ethereum is currently attracting the largest digital asset on its network as well.
Bitcoin on Ethereum reaches 100,000 locked units
According to the above chart, the total number of Bitcoin currently locked on Ethereum has reached 100,000. While many observed it as a positive, certain proponents were crossed about its long-term implication both Ether and Bitcoin.
Longhash’s Kyle Torpey suggested that from a long-term perspective, it was bad for Ether but Eric Wall opined a balanced outcome. The former lead at Cinnober stated,
“It’s both good and bad. People still become inclined to invest in ETH when they see the activity/utility on the platform going up. Most wBTC on Ethereum aren’t for ethereans forgoing ETH for BTC, it’s for people looking to chase a DeFi yield on their bitcoin holdings.”
While too much change is necessarily a good thing, the rise of non-ETH tokens on Ethereum was indirectly detrimental to Ether’s economy, here’s why.
Rise of non-Eth token reduces Ether’s monetary functionality on Ethereum
It is definitely true that Ether is the base token for Ethereum and for all gas transactions the use case of Ether is predominant. However, with time, if Ether is only used for that particular reason while not being held by investors or traders, a period of under-development will definitely stunt its value.
Michale Saylor, CEO of MicroStrategy recently clarified his decision to invest in Bitcoin because of the very fact that the community defends the network from meaningless change. Bitcoin’s rigidity to stand by its original mode of functionality is a factor of trust. Its assurance to not alter its initial ideology is something that Ethereum lacks, which is now deteriorating Ether’s value.
Innovation is a ket factor of digital assets and Ethereum has definitely taken some major steps in the right direction over the past couple of years. However, the value of Ether might face redundancy over time, if more and more non-ETH tokens receive prominence on its own parent blockchain.
