Although most of the attention has been directed to Bitcoin as it is within 20% of its all-time high, Ethereum is still a long way off and its benefits could be even greater, according to some analysts.
Ethereum got a little boost this week with the introduction of the Ethereum 2.0 deposit contract. ETH prices rose as Bitcoin climbed to $ 16,000, suggesting that Bitcoin’s influence is still the biggest driver of Ethereum’s momentum.
ETH is up over 8% on the week and is currently trading at $ 430 to hit its highest price in two months. However, it is still nearly 70% below its all-time high nearly three years ago.
Here’s what could propel Ethereum, which was even unveiled in the U.S. presidential election, to even greater heights.
What you see in #Bitcoin happens in $ Eth
The advantage of Ethereum cannot be overestimated. If you don’t understand. I am sorry.
Eth is required for staking, for gas for Uniswap, for EIP-1559, for DeFi, for DAOs. It will and always has been the driver of #alts pic.twitter.com/3G5qvSTUlv
– Pentoshi (@ Pentosh1) November 6, 2020
Ethereum staking opportunities
The ETH 2.0 deposit agreement opened the door to staking opportunities for early investors and Ethereum aficionados, but mass adoption is likely to be a little slower. At the time of writing, around 33,000 ETH had been staked out, valued at an estimated $ 14 million at today’s prices.
Mainstream staking likely won’t start until the exchanges simplify the process. Currently, validators need their own hardware, software, and stable power and bandwidth supplies to contribute. The complexity of staking at an early stage is likely to deter the majority of ETH holders.
Additionally, given that high street banks are being driven towards negative interest rates, staking Ethereum could be seen as a more stable way to save and earn when traditional methods have dried up.
Despite the emergence of various Ethereum killers, the network is still the backbone of all things decentralized finance (DeFi) related. This is unlikely to change as Ethereum’s smart contract and token protocol is the industry standard with the largest developer community.
As DeFi grows and matures from its current state of cloning and rug pulling, Ethereum’s role is likely to grow even bigger. This, in turn, should lead to increased demand for the asset to drive prices higher.
This summer’s DeFi boom had put such a strain on the network that smaller transactions were no longer profitable due to skyrocketing gas prices. While there have been many complaints from average users, it proved that Ethereum is the financial fuel for this new decentralized monetary landscape.
Scaling solutions are being rolled out faster than ever and the introduction of phase 1 of ETH 2.0 should help to consolidate their position even further. Before that, however, EIP 1559 can be used to address the problem of high network charges.
The future looks bright for Ethereum for now, and considering that it is so far behind Bitcoin in terms of its way back to an all-time high, it can still be viewed as largely undervalued.
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