Ethereum is rapidly becoming the most widely used blockchain in the industry, and its rising transaction fees are evident in the current situation. Congestion has been created for a number of reasons, with DeFi and Tether’s issuance being the top two reasons.
Now, with demand for block space getting out of hand, it was recently reported that Tether had adopted Ethereum’s scaling solution OmiseGo (OMG) network in order to reduce the confirmation time of the transaction,
As indicated earlier, the adoption of OmiseGo token might have helped on its expedition of doubling its value in the past week. However, with Ether largely becoming irrelevant on its own blockchain, is there a future where Ethereum’s growth continues to pull Ether’s value up?
Ether will accrue Ethereum’s value; eventually
According to a recent blog post shared by Ethereum supported by Ryan Sean Adams, it was explained that Ether’s demand would not be replaced on ETH due to three simple reasons. First, the blog stated that Ethereum’s block space demand makes Ether valuable as well because the native token is the only settlement medium on the platform. It was explained,
“There’s virtually an endless amount of use cases for Ethereum’s blockspace. All of it drives a tiny demand for ether.”
Secondly, Adams believed that the primary ethos of cryptocurrencies is to minimize the dependency of capital on centralized entities. DeFi is currently playing a critical role in that movement and it perfectly falls in place with Ethereum’s money protocol.
Right now, Ether is the most trust-minimized asset on the blockchain and Ether will continue to hold capital priority in the ETH economy.
The post added,
“This demand for ETH from DeFi is apparent in the data too. There’s now over 4.5 million ETH locked up in Ethereum financial protocols—valued at nearly $2B. This means that roughly 1 in every 25 ETH in circulation is locked up in DeFi right now.”
Lastly, Sean Adams believed that the imminent implementation of Ethereum 2.0 will lead to Ether’s value in the future to be looked as a productive asset. In fairness, in spite of these strong arguments for Ethereum, these are still assumptions based on what can happen whereas the current facts are that Ether has not been able to keep up with Ethereum’s development. Hence, only time will tell if Ether’s price position improves with respect to Ethereum’s growth as a blockchain.
