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Ethereum Price Preview March 1 – March 7


Last week’s piece highlighted the competition Ethereum was facing from the BSC network, indicated by the rise in BNB price. Today, we’ll look at the factors underlying Ethereum price as well as other competitive networks.

Interest in Cardano and Binance Rises

With Ethereum still heavily congested, the market is eyeing other networks as potential competitors. Binance Chain remains a popular alternative to Ethereum, housing DeFi platforms such as Pancake Swap.

BNB remains up 377% since last month after spiking even higher before correcting slightly. However, Binance isn’t the only game in town.

Cardano’s ADA token flipped BNB last week to become the third most valuable crypto project by market cap. 

Source: CoinMarketCap

This took many by surprise as Cardano has no ecosystem to speak of. Unlike Ethereum and, to a lesser extent, Binance, there are no apps or smart contracts running on the Cardano network. 

However, the update to change all of that goes live today, enabling smart contracts and native tokens, including versions of Ethereum native tokens.

This is crucial, as it may allow developers to launch Ethereum apps on Cardano for the same user experience but with lower fees and throughput times due to Cardano being relatively unused.

With two Ethereum competitors vying for third place in the market, the importance of Ethereum’s role in crypto has never been clearer. As the top dog when it comes to decentralized finance and applications, when Ethereum loses ground, the entire crypto market shifts to accommodate.

However, ETH still remains market dominant with a market cap of $172 billion to ADA’s $40 billion and $36 billion for BNB. ETH is trading at around $1,500, down from the all-time high of over $2,000.

While the whole market has corrected over the last week or so, most ETH buyers are still in profit according to Narimetrics, with $1,500 ETH still a hefty price point compared to that of previous years.

Coinbase IPO Outlines Risks

Coinbase has filed for an initial public offering, and in doing so laid out various risks that could impact the price of Bitcoin and Ethereum, the two currencies which account for 56% of Coinbase trading volume.

Coinbase cited “disruptions, hacks, splits in the underlying network also known as ‘forks,'” adding that “the future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate.”

The filing also cited pseudonymous Bitcoin creator Satoshi Nakomoto as a potential risk factor through either reputational damage or market moves should the mystery developer ever come forward or start moving their funds, now worth over $30 billion.

However, speaking of all of the above risks, Coinbase CEO Brian Armstrong clarified that “This doesn’t faze us, because we’ve always taken a long-term perspective on crypto adoption.” It’s interesting to note that the risks outlined for Ethereum were around hard forks and hacks, rather than any failure of the overall ecosystem continuing to be built on the network.

The DeFi market is now worth $37.27 billion in total value locked.

Source: DeFi Pulse

Maker remains in the lead with 15% market dominance and $5.8 billion in TVL, followed by Aave at $4.9 billion and Compound at $4.71 billion.

While the top three DeFi protocols are for lending, the following three are DEXes, namely Curve Finance, Uniswap, and SushiSwap.

Fundraising and Network Development Continues

Optimism raised $25 million in Series A funding in a round led by Andreesen Horowitz’ a16z firm.

Optimism is a startup focused on scaling the Ethereum network. A16z stated that it was “looking at various approaches and teams building Layer 2s,” solutions that are increasingly important as Ethereum becomes more widely used.

“Optimism is currently in the midst of a phased rollout, and will be ready for large-scale production later this year. We are thrilled to partner with Optimism, and to help support the Ethereum ecosystem as it continues its rapid growth,” the firm added.

Last month, a16z led a $20 million funding round for Celos, a blockchain payments platform built on Ethereum. Polychain Capital led a $5 million funding round last week for DFX, a decentralized exchange focused on introducing more non-USD stablecoins to invite more international users to DeFi. 

ETHA, the chain-agnostic yield optimizer powered by Polkadot and Ethereum, closed a $1.6 million funding round last week. Development and growth is in full swing on the Ethereum network as teams work on scaling solutions as well as new DeFi apps and protocols to solve problems and meet needs in finance.

However, not all development is welcomed equally. The controversial EIP-1559 proposal which may reduce miner earnings in its efforts to reduce overall network transaction fees.

Ethereum’s biggest mining pools are divided in their support and opposition for the Ethereum Improvement Proposal, with Sparkpool calling the plan “tyranny and robbery.”

Bitfly, which operates Ethereum’s second largest mining pool, Ethermine, is similarly opposed.

However the third-largest mining pool, F2pool, wrote a blog post last week to announce its support for EIP-1559.

In it, the pool argued that the ETH market has already priced in the proposal, meaning ETH is unlikely to lose value if it goes ahead. Miners will be burning part of their revenue, and this could make prices go even higher.

However, whether the market has priced in EIP-1559 is anyone’s guess. As it stands, pools in opposition now hold over 50% of the hashrate, meaning the proposal does not have anywhere close to the majority of hashpower it would need to go ahead. This may change as updates in the proposal continue to be made.

Media Roundup

Today is the last day of the Solana Foundation x Serum DeFi Hackathon which offers $400,000 in prize money to attending teams along with the opportunity to secure additional seed funding moving forward.

Bar on the Block is hosting the An Insight Into Crypto Derivatives talk on March 04, featuring high-profile speakers such as FTX CEO Sam Bankman-Fried, Bitmex CEO Alexander Höptner, and Deribit COO Luuk Strijers. 

The webinar will do a “deep dive into the types of crypto derivatives products, their common forms, policy, and regulatory regime,” as well as explainingn aspects of the trade of crypto derivatives.

On March 05, an event called The Conference.Exchanges DeFi.Edition_ is going ahead featuring dozens of speakers from Aave, Exmo, Trading View, Maker Foundation, 1inch, Kyber Network, and many more. The event focuses on bringing together leading crypto CEX & DEX, DeFi projects, traders, liquidity providers and regulators to discuss liquidity, fees, regulation, customer support challenges, and other relevant aspects of the DeFi industry.

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Conor Maloney
Conor Maloney Analyst