For any Ethereum cryptocurrency proponent in space, the growth of DeFi over the last few days may trigger a sense of optimism in their minds. The DeFi ecosystem was given a new lease of life as on 21 June, with DeFi’s total value in terms of the US dollar surpassing its all-time high by $1.48 billion.
At the time of the press, the TVL valued stood at $1.51 billion, according to the DeFi pulse website. However, the same community is currently wondering about the ineffective translation into Ethereum’s price.
Besides a minor surge witnessed on 23rd June, the largest altcoin is yet to exhibit any of the positives outlined by DeFi’s surging run in terms of market growth.
According to Ryan Sean Adams, Ethereum proponent, and Bankless author, DeFi’s success manifesting into eventual spike for ETH’s valuation can be argued from the perspective of both the hopeful, and skeptic.
Adams’s recent subtract suggested that Ethereum bulls eyed the potential of DeFi from a long-term perspective. DeFi has been relevant in the ecosystem for only about a year and half and the profit cycle of decentralized finance apps will eventually impact Ethereum cryptocurrency’s price as well.Ethereum cryptocurrency would not face a case of ‘getting replaced’ with stablecoins or tokenized Bitcoins such as WBTC since ETH needs to be locked up as collateral as a trading pair.
Lastly, the subtract added,
“Layer two scalability is hitting mainnet now and Eth2 is just as far along as any competitor. Finance is a game of network effects and Ethereum’s lead over competitors isn’t just growing it’s accelerating. Competing chains will be sidechains of Ethereum.”
However, the Ethereum cryptocurrency bears analyzed the space from a different point of view.
Countering the exact point, the bearish narrative remains that the profits on DeFi are unlikely to translate into Ethereum cryptocurrency’s growth and Ether will never be used as a capital asset, rather remain as a utility token in the space.
The issuance of USDT is concerning because it takes away the monetary utility of ETH in a way that Tether appears to have higher stability to hold or raise funds on Ethereum cryptocurrency. Plus, the complexities with gas prices continue to be alarming for the space as transaction fees mistakes over the past month, resulting in dire losses.
Is Ethereum cryptocurrency going to incur profits from DeFi?
The jury is still out on this development. Considerable arguments on both sides suggest that DeFi is still at a nascent stage in terms of real-world applications and functionality. Hence the plot forEthereum cryptocurrency and its base token Ether may be profitable in the near future, but nothing is set in stones at the moment.