Text | Ratchet Ringer
Text | Ratchet Ringer
After two years of silence, Ethereum "re-emerged".
In the past two weeks, the price of Ethereum has soared by 78%, becoming a well-deserved "bull market engine".
In addition to the currency price, the transaction volume and active addresses of Ethereum are even more gratifying. "There is support for the rise in the price of Ethereum." Someone said.
But success is also Xiao He, and failure is also Xiao He. The ever-expanding DeFi bubble may bring a new crisis to Ethereum...
secondary title
recovery
Five years after its launch, Ethereum is once again in the spotlight.
In the past two weeks, Ethereum is a well-deserved star project in the currency circle, and its currency price has been soaring.
From a low of $233 on July 21 to a high of $415 on August 2, Ethereum surged 78% in less than two weeks, hitting a two-year high.
Not only that, Ethereum also led the current round of digital currency bull market. Among the mainstream currencies, ethereum has the most violent gains - while ethereum is up 78%, bitcoin's increase is only 32%.
"Those who bought Bitcoin are secretly happy, and those who bought Ethereum are reveling." Zhang Peng, a player in the currency circle, said, "The familiar Ethereum is finally back."
In the past two years, Ethereum has been under suspicion for a while.
After January 2018, the price of Ethereum entered a long period of decline. Huobi data shows that in January 2018, the highest price of ETH reached $1,422. Two years later, in January 2020, the lowest price of ETH was only $133, less than one-tenth of the highest price.The second place in the market value of Ethereum has been occupied by Ripple several times. Its proud "world computer" concept is no longer sought after by the industry. A large number of DApps based on the public chain have closed down. The ICO teams that raised a large amount of ETH in the early years also sold almost all the ETH in their hands. (See）
"The currency price plummeted 44% in 20 days, is Ethereum really going to be cold? "
"The public chain has no value, and Ethereum, as the former 'king of the public chain', will naturally decline." A practitioner in the currency circle pointed out.
The re-emergence of Ethereum is not limited to currency prices. In terms of the number of transactions, Etherscan data shows that since January this year, the daily transaction volume of Ethereum has shown an obvious upward trend. At the beginning of the year, the minimum number of transactions was only 435,500, but recently, the number was 1,261,400, an increase of 189%.
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Ethereum daily trading volume chart
In terms of the number of daily active addresses, BitInfoCharts data shows that the number of daily active addresses of Ethereum increased from 208,292 on January 1 this year to 623,042 on August 4, an overall increase of 199%. In just 7 months, Ethereum has tripled its daily active users.
In the past two months, the number of unconfirmed transactions on the entire network of Ethereum has also remained high. On June 30, the number of unconfirmed transactions on the entire Ethereum network was 107,773; on August 4, this number changed to 154,839, an increase of 43%.
The emergence of a large number of unconfirmed transactions has pushed up the transaction fees of Ethereum. Etherscan data shows that since May this year, Ethereum transaction fees have shown a clear upward trend. In the past 3 months, Ethereum’s fees have increased by at least 600%.
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reason
reason
ETH leads the currency market, Ethereum rises again, what is the reason?
Many industry insiders pointed out that the biggest driver of Ethereum’s recovery is the current hot DeFi.
In 2020, DeFi is no longer the exclusive favor of a few geeks, but has become the focus of heated discussions among almost all players in the currency circle.
"Recently, all major mainstream wallet apps have built-in DeFi applications such as Compound, and it has become easier for players to participate in DeFi." Zhang Peng said to a blockchain, "Now, those who don't play DeFi in the currency circle feel that they are Out of date."
Overseas, DeFi is even more popular. For example, in the United States, DeFi has become an important investment field for currency players.
"In the eyes of some geeks, DeFi based on code is not controlled by human nature, and it is more 'reliable' than financial products provided by financial predators." Sun Yuan told Yiben Blockchain.
In the United States, the interest rates of "capital-guaranteed" investment products such as bank deposits and government bonds are extremely low, but DeFi can achieve higher interest rates. Therefore, not only players in the currency circle, but also a group of novice users have begun to invest in the DeFi market.
Ethereum, on the other hand, is a public chain platform that supports almost all DeFi services. It is reasonable for DeFi to boost Ethereum.
"It's like the original ICO. If players want to participate in the ICO, they must first buy ETH. It's the same with DeFi now. Without ETH, you can't play DeFi." Zhang Peng said, "So, the price of ETH has risen accordingly. , is inevitable."
The rise of DeFi and the recovery of Ethereum have also brought more thoughts to blockchain practitioners.
DeFi has promoted the recovery of Ethereum, and Ethereum is also an excellent platform for the implementation of DeFi applications.
First of all, the DPoS consensus mechanism widely used in the new generation of public chains such as EOS still has the question of "sacrificing decentralization for performance". Therefore, the DeFi community prefers the more decentralized Ethereum.
Secondly, after five years of stable operation, Ethereum has established a complete ecosystem. "From wallets, blockchain browsers to development tools, DeFi players and developers have sufficient choices to get started quickly." Li Ni said that Ethereum's position as the "No. 1 public chain" in the chain circle is still unshakable.
Today, the entire DeFi industry has taken root and grown stronger on Ethereum. It is also difficult for new DeFi projects to escape from the soil of Ethereum.
"Current DeFi players will obtain Dai on MakerDAO, borrow on Compound, and buy and sell coins on Uniswap. These platforms are all based on Ethereum." Sun Yuan said, "It's a bit like playing with building blocks. If you use all Lego bricks, people build high-rise buildings. If someone uses other brands of bricks, they have to start from scratch.”
The same is true for the DeFi ecosystem. If a new DeFi project chooses a public chain other than Ethereum, it will not be able to use the infrastructure already built by the DeFi community, which is asking for trouble.
future
future
What will be the future of Ethereum, which is firmly seated on the "throne" of the first public chain?
After Ethereum has experienced considerable gains, some players and practitioners are still bullish on the future of Ethereum.
Arthur Hayes, co-founder of digital currency exchange BitMEX, predicted that the next target of Ethereum is $500.
However, most practitioners pointed out that the current Ethereum is still facing a big crisis.
First of all, the biggest test that DeFi brings to Ethereum lies in performance.
The recovery of Ethereum has not only pushed up the currency price, but also pushed up the transaction volume and handling fees of the platform.
"The handling fee for one transaction on Ethereum is now close to $1. Multiple transactions are required to complete a Compound loan, and the highest handling fee may reach more than $10." Zhang Peng said.
Improving the performance of the Ethereum platform has become a top priority.
On August 4th, the high-profile Ethereum 2.0 project ushered in the latest progress, and its test network Medalla has been launched. The official website of Ethereum 2.0 is also expected to go online in 2-3 months.
"In order to improve performance, Ethereum 2.0 has two major upgrades, one is to convert the consensus mechanism to PoS, and the other is to use sharding to improve concurrent performance." Li Ni introduced, "In comparison, PoS technology is not complicated, but There is almost no precedent for a fragmented public chain platform, and it is extremely difficult to develop."
Second, for Ethereum, DeFi is a dangerous double-edged sword.
"DeFi has obviously created new prosperity for Ethereum, but it also planted the seeds of crisis for Ethereum." Sun Yuan said.
The core of DeFi is still the core of traditional financial business, namely mortgage lending. Restricted by the technical architecture, DeFi can only conduct digital currency mortgage lending at present, but cannot conduct credit or fiat currency lending. "But obviously, people's demand for digital currency lending is not that great." Li Ni pointed out.
Therefore, projects such as Compound will introduce new methods such as "liquidity mining" to encourage players to borrow and borrow on the platform.
Stimulated by the mining mechanism, some players began to repeatedly lend and borrow assets on Compound to obtain COMP tokens. And these repeated lending behaviors have pushed up the systemic risk of the entire DeFi ecosystem.
"In general, the systemic risk of DeFi is intensifying. Compared with traditional finance, DeFi is too idealistic and lacks the rationality and logic of traditional finance. Especially after some DeFi projects introduced liquidity mining mechanisms, many people It smells like FCoin." Li Ni said.
Compared with other currency projects, the consequences of DeFi systemic risks may be more serious.
"In the past, most of the ICO project plummets were artificially caused, that is, the project party smashed the market and cut leeks. Therefore, the currency price trend of a single project often does not affect the overall market." Sun Yuan said, "But most DeFi projects co-exist and prosper. Once A thunderstorm in a certain DeFi project may lead to the collapse of the entire DeFi building.”
Li Ni believes that after this wave of DeFi craze dissipates, only three or five DeFi projects may survive in the future, and other projects will repeat the mistakes of most ICO projects.
And once the DeFi collective thunderstorms, Ethereum will also be impacted. "Just like after the ICO bubble burst, the price of Ethereum will plummet."
By then, the future of Ethereum will become even more murky.
The DeFi bubble has attracted some people's attention.
Some practitioners told Yiben Blockchain that some "coin circle bigwigs" who made countless money during the ICO period have also begun to come back out of the arena, planning to launch their own "DeFi projects".
"As long as you hang the title of DeFi, you can make money." These "coin circle bosses" boast so much.
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