The price of Ethereum has risen by over 350% this year. Ethereum has the second largest market capitalization after Bitcoin, but there is not much cash, and potential more operational problems may prevent it from surpassing its major competitors.
Driven by the surge in decentralized funding (DeFi) and expectations of technological austerity this summer, Ethereum has outperformed major digital currency competitors this year, but faces obstacles that may hinder its growth.
In terms of price, Ethereum's market value this year is second only to Bitcoin, second only to Bitcoin, but there is not much cash, and potential operational problems may prevent it from surpassing its major competitors.
Technically , Ethereum is a blockchain network in which decentralized applications are embedded, and Ethereum is a token or currency that enables or promotes the use of these applications.
According to the data of CoinGecko.com, the market value reaches 1 trillion US dollars. It hit a record high of US$3,610.04 on Thursday, rising 1% to US$3,524. This year's 97% has actually fallen by 18% since Bitcoin hit an all-time high of $65,000 in mid-April.
The surge in institutional interest has increased the demand for Ethereum, but the supply is limited. According to Kraken Intelligence, the research blog of the Kraken Cryptocurrency Exchange, the exchange’s token supply reached its lowest level in nearly two-and-a-half years in April.
"This is a complete ecosystem where other applications can be built," said Bradley Kam, CEO of Unstoppable Domains, a blockchain domain provider.
The center of the origin of Ethereum is DeFi, which refers to a peer-to-peer cryptocurrency platform can facilitate lending outside of traditional banking institutions.
Many places on the Ethereum network use open source and algorithms, which can set rates in actual time based on supply and demand. Fixed costs: Total loans on the DeFi platform-as of last Friday, the figure was $79 billion, and DeFi Pulse data shows that this is nearly 600% higher than the $11 billion in October.
However, DeFi has its own problems. Due to complex conditions such as Ethereum's slippage or insufficient gasoline prices, the decentralized exchange based on Ethereum failed. In other words, a commission is required for successful transactions on the Ethereum blockchain.
For example, between 1 o'clock on April 15th and April 21st.One million transactions were made through Uniswap (DeFi protocol used to exchange cryptocurrencies).
According to the statistics of analysis platforms Etherscan and Dune Analytics, there were 241,262 failures. This is the largest number of transaction errors in the entire Ethereum network. Said Alex Wyrn, CEO of IDEX Crypto Exchange.
He said that issues such as failed transactions and early execution are not trivial and cost users millions of dollars a day. This refers to the practice of executing transactions in the execution queue immediately before the contract. The known future "These important issues limit the appeal of these products to a wider audience and ultimately hinder the development of the ecosystem.
" Wyrne estimates that DeFi hackers lost more than $285 million this year.
According to lawyers, DeFi sites represent the future of financial services by providing an affordable way to access individuals and businesses and provide them with credit.
Technology bumps
Market participants said the network's inability to meet demand without high transaction fees and slow transaction execution also affected that Ethereum.
Speed, efficiency and scalability issues. However, John Woo, president of AVA Labs, an open source financial application platform, pointed out that the proposed port to Ethereum 2.0 has been in development for many years.
Ethereum also faces fierce competition from networks such as AVA Labs Avalanche and BINANCE Smart Chain, which also supports Ethereum assets and applications.
Since February, they have transferred more than $170 million from Ethereum to Avalanche.
Another technical enhancement
However, people hope to adjust the technology called EIP (Ethereum Enhancement Proposal) 1559, which is expected to be launched in July and reduce the supply of Ethereum, which will give a certain momentum to the digital currency.
Analysts said that by introducing a mechanism to burn some transaction fees and slow down issuing tokens, Ethereum fees.
Analysts believe that this reduces the supply of Bitcoin and raises the price to a record high. Richard Galvin, co-founder and CEO of crypto fund Digital Asset Capital, said:
"The amount of potential impact is twice that of Bitcoin." Control.
"They are all very active drivers and their results are very good.
