The price of Ethereum still fell more than 50% from the historical high, but it is worth emphasizing that dozens of Ethereum indicators have reached new highs during the year.
Original title: “Depth丨2020, Ethereum’s 10 indicators have reached a record high! 》
Author: Lucas Campbell
The claim that BTC is the “fastest horse” as a digital gold and an inflation hedging tool has begun to gain investors’ approval . As a result, the asset sparked a new wave of institutional interest, pushing prices to new highs.
Legendary fund managers such as Paul Tudor Jones and Stan Drunkenmiller began to invest in the asset. At the same time, Square, Mass Mutual, and MicroStrategy became the first companies to hold BTC on their balance sheets.
Although the ETH community held DeFi Summer 2020, which is characterized by the explosive investment of interest and capital into decentralized finance and unlocked the new distribution mechanism of the ownership economy, this craze only exists within the community to a large extent .
So far, the price of ETH is still more than 50% lower than its ATH.
However, the Ethereum economy performed well this year. It is worth emphasizing that from the launch of Ethereum 2.0 and the boom in DeFi yield farming, the ecosystem has experienced exponential growth across the board. Dozens of Ethereum indicators reached new highs during the year.
Here are ten Ethereum charts that will reach ATH in 2020:
1. The utilization rate of Ethereum hit a record high
Data source: Etherescan
Network utilization can be said to be one of the most basic indicators to measure the health of any public blockchain . Simply put, it can be transformed into a demand for block space. It means that people are actually willing to use (and pay) the ledger as a settlement layer.
The demand for Ethereum block space has reached its limit. The demand for using Ethereum is so large and continuous that the utilization rate of the network has been at the top, and it really cannot be higher.
Whether it is borrowing capital on Aave or Compound, exchanging tokens on Uniswap, trading derivatives on Synthetix, launching DAO, or sending USD stablecoins to anyone in the world, Ethereum has always been the settlement layer of the decentralized economy. There is a lot of demand .
Now, Ethereum needs to scale up. Whether it comes from the second layer of solutions such as the optimistic rollup or the upcoming Ethereum 2.0, the network has reached the point where it requires too much block space, and it needs to increase its capacity to realize its full potential.
2. Ethereum Hashrate hits a record high
Data source: The Block
Despite the imminent transition to PoS, the computing power of Ethereum has climbed to a new high. In other words, the network is more secure than ever . According to The Block’s data, Ethereum’s current computing power has exceeded 271 TH/s, exceeding its historical high in September 2018 by approximately 240 TH/s, which was achieved in a bear market.
With the setting of the difficulty bomb in July 2021, miners swallowed up all the remaining ETH before their mining equipment was “bricked”. But whether the community needs to postpone the difficulty bomb again is another question.
Even if all Ethereum 2.0 phases are working in parallel, which should be much faster than the initial phase 0 launch, it seems unlikely that the network will switch to PoS in the next six months.
3. Open interest in ETH options hit a record high
Data source: Skew
The public equity of options refers to the total circulating value of unexercised options . This indicator of Ethereum is close to 1 billion U.S. dollars. Although this number is relatively small from a big point of view, it does give us some important enlightenment about the network. Nic described this situation very elegantly in his article:
Just as the emergence of derivatives was originally designed to allow farmers to hedge the risks of crops and lock in the specific price of the harvest (and obtain the liquidity of future crops so that they can buy seeds and fertilizers today), the option is against the producers of Bitcoin – Miners are also useful. Based on their own equipment, miners can roughly estimate how many bitcoins they will mine under reasonable assumptions of computing power. If they want to get the “advance” of expected mining coins, they can sell the call. This means that they promise to deliver the Token at a certain price on a certain date-but they can get paid for this promise today. With this cash advance, they can conduct financing operations more efficiently.
What this picture tells me is that Bitcoin producers now have access to more complex financial products that they can use to hedge risks. In theory, this should mean that the mining industry is more stable and less affected by booms and depressions. This allows miners to focus on operating their business effectively and frees them from the burden of worrying about the unhedged risks of their equipment.
From the same perspective, the development of Ethereum options can make miners’ operations more efficient, because they can hedge the risk of volatility and provide funds for operations by selling call options.
In addition, the options market allows traders to express their prospects more creatively, and market participants have more tools, which can naturally support more capital inflows.
All in all, the $1 billion open equity is a positive signal for the growth of the network and the financial instruments available to all market participants .
4. The number of DeFi users reached the highest level in history
Data source: Dune Analytics
At the beginning of this year, the number of users of DeFi was less than 100,000, but then there was a parabolic trend and the number of users of all protocols exceeded 1 million . It should be noted that the “DeFi users” here are actually only valid addresses, so the actual number is likely to be reported.
In any case, this picture can illustrate all the problems. The number of independent wallets interacting with DeFi has risen completely vertically-we all know why.
The introduction of yield farming triggered a brief period of mania in the Ethereum ecosystem . And it quickly became more fanatical. At its peak, there were new farming, endless mobile mining activities, and wave after wave of degens connecting to Pool 2, but they were destroyed within a few hours. This is reminiscent of the ICO era, when new tokens are launched every day to promote the promise of bringing billions of users into cryptocurrencies.
But this is not all bad. The encryption industry unlocks a valuable distribution mechanism that may have a profound impact on future equity distribution methods. What’s the point? Give ownership to those who provide and create the greatest value: users.
Platforms like Facebook, Youtube, Twitter, Uber, and Airbnb do not really rely on themselves to create value. They rely on personal and network effects. Everyone who uses these platforms will make it more and more valuable. Whether it’s creating video content for the global population or giving strangers a ride across the city, these multi-billion dollar platforms rely solely on individuals to generate value. People don’t go to Facebook to read Facebook content, and they don’t live in Airbnb houses.
It all depends on the individual.
Then why not give them the ownership of the platform? This is the yield farming pioneered by DeFi. Individuals provide valuable services to the network (such as providing funds to Compound) and thus obtain ownership of the agreement.
It is not difficult to imagine that in the future, Uber drivers will get a part of the equity every time they ride a car, or every time an Airbnb host receives a guest, they will get a part of the equity.
5. The total lock value is at the highest point in history
Data source: Debank
With the proliferation of wallets, the total lock-up value (TVL) has also seen a massive increase, which can also be partly attributed to the boom in yield farming.
At the beginning of this year, the value of all agreements held was approximately US$600 million. But it wasn’t until February that the sector reached unicorn status. Fast forward to the end of the year, and the value locked in by DeFi sits far more than $15 billion – a 25-fold increase in any year. As mentioned earlier, the growth of DeFi value lock-in is mainly due to the frenzy of yield farming throughout June and September .
Stimulated by Compound’s COMP Token, as investors received astronomical passive income returns, capital began to flood into the emerging (sometimes unaudited) DeFi protocol.
6. DEX volume hit a record high
Data source: The Block
The rise of decentralized exchanges (DEX) is one of the notable events this year . Although they have been one of the most popular use cases for Ethereum, its historical performance has been below expectations. The clumsy interface, slow transaction speed and many other problems plagued the first batch of Ethereum DEX. If you have been exposed to this project, you may remember to trade altcoins on EtherDelta.
Since then, the situation has changed dramatically.
As a result of DeFi Summer, the trading volume of DEX soared in 2020 and reached a peak of more than $25 billion in September alone. Even better, these crypto-native exchanges have gained a significant advantage on centralized exchanges (CEX), because the market share of DEX trading volume has reached up to 15% of centralized peers-from <1% in 2019 The average level has risen sharply. Uniswap, Curve and Balancer are all major promoters in this field.
But so far, Uniswap is the dominant player. Constant product AMM accounts for nearly 60% of all DEX trading volume , while other products support the low trading volume of tens of dollars. In the past few years, significant progress has been made in this field, which is a promising sign to see DEXs competing with centralized exchanges.
After all, keeping up with the permissionless, global nature of the Ethereum financial agreement should be difficult . This is especially true for similar projects such as Uniswap when it comes to supporting long-tail assets on Ethereum. Any ERC20 Token can be listed immediately-no jump, no listing fee, no additional operations. This is a level playing field because everyone must abide by the same rules. All you have to do is deposit the initial liquidity, and anyone and anywhere can access the Token-whether it is a transaction or liquidity regulations.
Therefore, GoliATHs like Coinbase and Binance are significantly faster when listing new tokens. This is obvious. Sushiswap’s SUSHI on Binance and Graph’s GRT on Coinbase were both listed on the same day.
And maybe one day we will see CEX begin to use liquidity agreements for trading, instead of building its own infrastructure.
7. The impact of BTC on Ethereum hit a record high
Data source: BTC on Ethereum
The BTC circulating in the Ethereum economy has exceeded 3.3 billion U.S. dollars, accounting for 0.675% of all BTC in existence.
Similar to everything else in DeFi, this number has a crazy parabolic trend due to the boom in yield farming. People can no longer idle their BTC. Instead, they chose to use any of the dozens of high-yield passive income opportunities provided by DeFi. This is too good to be resisted.
Whether it is to become a liquidity provider on Curve or Uniswap, or to deposit it on platforms such as Compound and Aave, the decentralized economy of Ethereum provides BTC holders with multiple ways to earn passively in a non-custodial manner Revenue, which is consistent with the core cypherpunk philosophy . This is in sharp contrast to the choices of BTC holders, in which depositors will have to rely on centralized lenders like BlockFi or Celsius to earn yields.
Even better, there are more Bitcoin packaging forms on Ethereum than ever before. Although wBTC has historically dominated the asset class, the ecosystem now has more choices, including renBTC, tBTC, sBTC, and other options.
I suspect this is a trend that will end soon. Ethereum will only have more ways to use your funds in the future, and BTC holders will have more forms of packaging Bitcoin to choose from.
In other words, it is only a matter of time before we see it slowly rise to 1% or even higher.
8. ETH held by Grayscale hit a record high
Data source: The Block
Grayscale is becoming a black hole for encrypted assets. Not only did the company hold 2.5% of all BTC, they also increased its ETH position to 2.3% of this year’s supply (approximately $1.7 billion) through its $ETHE investment product . The asset’s daily trading volume has also reached a record high, with an average daily trading volume of more than US$24.6 million in November – much higher than its previous record of US$15.6 million in August 2020.
But here is a little hint. Although the proliferation of Grayscale’s Ethereum products is a good sign, the main interest of institutions (they are a necessary condition for casting “shares”) may be to use the high premium of $ETHE instead of using it for anything meaningful Long-term investment position.
For reference, the current premium rate of $ETHE is 132%-a good rate of return for ETH locked for 6-12 months. In any case, the rise of $ETHE does provide institutional investors and qualified investors with opportunities to get involved in Ethereum.
They have 6 months to wait for the asset flip to earn a premium, so we can only imagine that at least some of these investors will eventually walk into the rabbit hole and start digging their investments to understand what Ethereum is.
9. The stablecoin on Ethereum hit a record high
Data source: CoinMetrics
The Cambrian outbreak of DeFi is only possible with the growth of stablecoins or “dollar stablecoins” on Ethereum . In the past two years, these U.S. dollar-linked assets have flourished in the ecosystem and now represent nearly 20 billion U.S. dollars in value on the web.
But in 2018, stablecoins hardly exist outside of Tether (USDT). Now, there are dozens of different types of USD stablecoins, from currency support to algorithms. And it seems that this trend has not slowed down.
Since these synthetic dollars can be publicly accessed by anyone with an Internet connection, Ethereum has greatly increased the influence of the U.S. dollar on more users around the world. The recent incident in Venezuela is a good example. Circle, the organization behind USDC, cooperates with the Bolivarian Republic of Venezuela and Airtm to provide assistance to Venezuelan frontline medical workers through the use of USDC.
In the cooperation of multiple participants (including the US government), they were able to bypass Maduro’s capital controls on the domestic financial system. As a result, they were able to invest millions of dollars in the hands of people fighting for the health and safety of the Venezuelan people.
This truly shows the power of embracing public blockchains. The United States and other nation-states can bypass the restrictions imposed by foreign jurisdictions and expand their scope and influence by using these permissionless platforms instead of confronting them.
10. ETH in deposit contracts hit a record high
Data source: Dune Analytics
The last picture is a bit cheating, because now it can only go up. Nevertheless, ETH became the first Internet bond to achieve unicorn status soon after the Ethereum 2.0 deposit contract was launched. The contract currently holds more than 1.5% of the total supply of ETH, representing a value of more than 1.1 billion U.S. dollars, and guarantees the ultimate public chain of Ethereum.
Although it is too early, the signs of capital influx into the contract indicate that the Ethereum community collectively supports the advancement of this new field of decentralized future scalable blockchain .
The best part is that the infrastructure built around Ethereum 2.0 will only increase.
Whether it is major exchanges like Coinbase or Binance that support ETH staking, or the launch of decentralized staking providers like Rocket Pool, or provide individuals with better plug-and-play hardware solutions to participate in Ethereum 2.0 Verification will only become more convenient in the future.
Look to the future
When BTC is celebrating a new high in price, Ethereum also has a lot to celebrate. A series of indicators from fundamentals to narratives are showing the adoption of Ethereum as the global settlement layer of the Internet of Value.
A decentralized economy is being built day by day, and there are many developments to prove this. Considering that the DeFi industry barely existed two years ago. Now, there are more than 15 billion U.S. dollars in funds used to support powerful financial applications, and 20 billion U.S. dollars in tokenized U.S. dollars-anyone can access all of these funds as long as there is an Internet connection.
Although I emphasized these ten items, there are many other indicators in the entire Ethereum economy that are breaking new records . NFT and digital art have reached seven-figure trading volume, and crypto-native financial primitives such as lightning loans have now soared to billions of dollars in trading volume.
There are many entry points: Ethereum is growing .
And there are fundamental catalysts to support this growth. The smooth progress of Ethereum 2.0, CME recently announced that they will support ETH futures in 2021, and Jerome is also warming up the money printing machine for a new round of stimulus policies.
Next ETH will record a new high?
