Last week, we discussed the competition seen from competing networks as high traffic continues to present problems for Ethereum functionality. Today, we’ll examine Ethereum’s fundamentals, underlying price and the future growth of the network.
Bull Market Pricing Out Retailers?
The bull market is in full swing. A whale account transferred 100,000 ETH worth approximately $180 million on March 12
ETH whales remain in control of the majority of Ethereum’s circulating supply, with Santiment reporting that 68% of ETH resides in whale wallets. With fees for trading ERC20 tokens ranging from approximately $70 to $140 over the past week, it’s no surprise that accounts holding more modest sums have been more reluctant to make trades on the network.
However, with the boom in NFTs and DeFi products at record highs, ether is in high demand as a necessary requirement for paying gas fees to swap and purchase tokens. Coupled with the upcoming EIP-1559 update which could make ETH become deflationary, the case for upward price momentum is solid.
Development Battles Continue
While the EIP-1559 upgrade to burn mining rewards to stabilize fees has been greenlit for July, many miners still oppose the proposal.
If it had been activated from October 2019 – October 2020, the protocol would have burned 1% of the token supply or 1 million ETH. Traders and investors have largely welcomed the prospect of a scarcer and more deflationary token supply, however miners – whose profits will be negatively effected – have unsurprisingly taken issue.
A Reddit thread by u/Always_Question pointed out that one way to push EIP-1559 through would be to prioritize the “Merge” phase of the Eth2 roadmap ahead of data sharding.
“Rollup tech buys us time,” read the post. “Both optimistic rollups and ZK rollups are now coming online. These have the ability to scale Ethereum from less than 10 TPS to over 1000 TPS.”
The Redditor went on to say that “having the Merge at the ready provides a fallback for the community should a cartel of miners collude to neutralize the positive effects of EIP 1559. There are some within the mining community who have threatened to form a group of miners to essentially prevent some aspects of EIP 1559 from having their intended effect.”
Ethereum founder Vitalik Buterin and Ethereum Foundation researcher Danny Ryan both voiced their agreement in the thread.
NFT Market Makes History
A groundbreaking sale of digital art took place on March 10 as Beeple’s “Everydays: The First 5000 Days” collection sold for $69 million, or 42,329 ETH.
Beeple, AKA Mike Winklemann, created a piece of digital art every day for 13 years to create the piece. It was purchased by Metapurse, a crypto firm based in Singapore.
Metapurse has purchased Beeple collections in the past along with many other NFTs, offering investors exposure to them through the B20 token.
Investigative journalist Amy Castor pointed out that Beeple owns a 2% of all B20 tokens, citing a potential conflict of interest and suggesting that Metapurse is attempting to pump the price of NFTs in order to inflate the price of its own tokens.
DeFi Hacks Continue
Multiple projects in the DeFi space were hacked recently. The Dodo protocol, a decentralized exchange, was exploited for $3.8 million on March 8, although a released statement indicated that the exchange expected to recover half of those funds.
On March 4, Binance Chain project Meerkat Finance lost $31 million on its first day. This may have been a hack, although many in the community suggest that the dev team may have simply stolen the funds in the all-too common rug-pull scenario seen time and again in the DeFi space, with anonymous teams and inexperienced investors more common than ever.
The Meerkat Finance developers reportedly claimed that the loss of $31 million was a “test” designed to highlight greed in the DeFi space, promising to return the funds.
The DeFi space now holds $43.7 billion in total value locked.
Maker protocol holds 16% dominance with $7.02 billion in TVL, followed by Compound at $6.51 billion.
The Blockchain Expo Global will take place from March 17 – 18, with 9,000 attendees expected. The event will “showcase the most cutting-edge technologies from more than 300 exhibitors and provide insight from over 500 speakers sharing their unparalleled industry knowledge and real-life experiences.” Guest speakers include representatives from Mastercard, Uber, and the Bank of England, and 1,000 attendees are expected.
The Blockchain Africa Conference 2021 will take place on March 18, featuring speakers and delegates from over 35 countries including investors, startups, enthusiasts, developers, corporates, policymakers, and regulators. Cardano founder Charles Hoskinson will attend along with Peter McCormack, host of the What Bitcoin Did podcast, Aave CEO Stani Kulechov, and many more.