The Ethereum London Hard Fork successfully took place this week, bookmarking a new and exciting chapter for the world’s largest virtual machine. A new story is being written at this very moment for Ethereum, to which both its price action and adoption are set to shock the world.
Crypto, like any traditional market, often follows the cycle of “buy the rumor, sell the news.” After months of anticipation leading up to the Ethereum hard fork, which took place after the designated block was transacted, Ethereum continued to rise in price. Surprising many, and liquidating millions of short-sellers in the process, the immediate catalyst of ETH’s price rise was likely due to crypto investors and researchers being able to watch ETH burn in real-time with every transaction processed by miners.
The new Ethereum Improvement Proposal (EIP 1559) upgrade includes a designated token burn on every transaction and an incentivization system that lets users tip miners for faster transactions. As of writing this, over 4,700 ETH have already been burned, at an average burn rate of 2.26 ETH per minute. (EtherChain)
This upgrade brings the network closer to launching Ethereum 2.0. Once ETH goes Proof-of-Stake (POS), the goal is for the burn to offset the inherent inflation created to power the network. Ethereum is currently experiencing a greater than 50% supply reduction on daily transactions. ETH going POS will have positive implications for ETH’s environmental impact and carbon footprint, reducing its energy consumption by over 99%. (Bloomberg)
There is also a new standard base fee for transactions, which should help to stabilize the costly transaction process and plant roots for further upgrades that will enhance the blockchain’s ability to handle heavy traffic—a much sought-after goal.
More than 5% of ETH is already locked up in ETH 2.0 to power the POS network and earn staking rewards before the official migration, accounting for over 6 million ETH. (Bitcoinist)
“With $13 billion worth of Ether locked up in Ethereum 2.0 and $70 billion locked up in decentralized finance, we have enormous demand for the Ether token,” said ConsenSys founder Joe Lubin. Lubin also called ETH, “Ultra-sound money.” (CoinTelegraph)
Of course, you can’t talk about what’s next for Ethereum without casting an outlook on the future of decentralized finance. The vast majority of DeFi platforms are built on the Ethereum blockchain, which is why it’s often called the “backbone of the DeFi network.” The more efficient Ethereum becomes, the more efficient the DeFi network will become. This is crucial, as larger investment firms are beginning to take a serious look at how to get involved in DeFi.
Vitalik, the co-founder of Ethereum, has often said he envisions Ethereum eventually reaching one million transactions per second, after going POS and implementing sharding. You can only imagine the use cases and adoption of DeFi when transactions settle nearly instantly.
And if that’s not enough, the Non-Fungible Token (NFT) craze went full throttle the past week. Keep in mind the majority of NFT platforms are also built on the Ethereum network. While the fair market value of NFTs is still being understood by the market, they are often compared to rare baseball cards or paintings. NFTs offer the fun of collectability paired with the appreciating value of unique certificates of authenticity minted on the blockchain. For many rare NFTS, there is only one.
CryptoPunks, one of the original NFTs, is a project in which 10,000 unique punks were created on the blockchain. These 8-bit pixelated art pieces, each with their own unique hairstyle and vibe, have had another cycle of explosive growth. Currently, CryptoPunk 3100, one of the rarer CryptoPunk characters available, is going for an astonishing 35,000 ETH. In USD terms, it shakes out to a staggering $91 million dollars. Many older punks are being put up for auction and being sold to the tune of hundreds of thousands to millions of dollars. With even the least sought-after punks going for well over $100k, there is a new price floor being created to acquire a punk through an auction.
The NFT craze isn’t slowing down and the FOMO is real. Other NFTS, like Crypto Apes, are also rising in price, and people are even creating NFT collectible rocks—no, we’re not kidding—on the blockchain.
Ethereum is the gateway to DeFi and NFTs. ETH supply is being reduced every minute, with tokens continuing to be burned on the network. When you add this to the substantial amount of ETH that’s already locked up in ETH 2.0 and DeFi, the chance that demand will outweigh supply seems inevitable, and we all know what it means. This is the new era.
Top Market Movers as of August 6, 2021
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- Terra (LUNA) +44%
- Elrond (EGLD) +35%
- Ocean Protocol (OCEAN) +34%
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