Ethereum's Ether Rises Amid Layer-2 Scalability Success and Upcoming Cancun Upgrade
Summary:
Ethereum's native cryptocurrency, Ether (ETH), has recently seen a 5.5% rise in value, sparking speculation among traders about the factors behind the hike. Ethereum's active user count has reached 2 million in a week, in part due to its layer-2 scaling systems, and the proposed Ethereum Improvement Proposal (EIP) 4844 aims to further enhance rollup network efficiency. Additionally, Ethereum's next upgrade, Cancun, is slated for testing from Jan. 17 and is predicted to lower transaction fees. The overall increase in Ethereum's network and ecosystem usage, along with dominance in DApp deposits and anticipation of further upgrades, likely contributed to Ether's recent surge.
Ethereum's native cryptocurrency, Ether (ETH), has witnessed a 5.5% upswing since Dec. 27, but has been stopped in its tracks at the $2,400 resistance level. There is now speculation amongst traders regarding the causes behind this rise in Ether's value and the relevance of these factors moving forward. As traders anticipate a breakthrough beyond $2,500, the price of Ether has soared to a 19-month peak. Despite the overall cryptocurrency market capitalization remaining steady at $1.68 trillion, the intraday high of $2,446 that Ether achieved on Dec. 28 has not been seen for over 19 months. Despite the average transaction cost exceeding $5, which may deter users of decentralized applications (Dapps), Ether's price could potentially maintain its bullish momentum.
While critics argue that competing blockchains are increasing in significance due to Ethereum’s supposed failure to offer scalable and secure solutions, Ethereum’s accomplishments with layer-2 blockchains and the dominance of the Ethereum Virtual Machine can't be overlooked. The total value locked up in Ethereum, a whopping $29.6 billion, negates much of the criticism. For context, BNB Chain and Solana only have $3.6 billion and $1.4 billion locked up, respectively.
Although a large amount of total value locked (TVL) isn't necessary for every Dapp, and the decentralized finance (DeFi) industry is ramping up its deposit utilization, other adoption metrics like transaction count and active addresses are more indicative of usage. With volumes growing by 38% in just the past week, Ethereum far surpasses rivals like BNB Chain and Solana.
Ethereum’s layer-2 scaling systems have seen extraordinary user engagement, and once these are factored in, Ethereum is leagues ahead in terms of active Dapp users. Besides the conventional Polygon network, privacy-oriented zkSync Era has pushed the overall Ethereum Rollup active user count to 2 million in just a week. A token for the zero-knowledge rollup is in the pipeline, which is likely to boost network usage.
On Dec. 28, a proposal by Ethereum co-founder Vitalik Buterin to lessen the load on validators, theoretically cutting the required signatures by 70% and adding quantum-resistance, also boosted Ether's value. Various solutions have been proposed, including decentralized staking pools and a "light" staking method alternated with accountable committees.
The next Ethereum upgrade, Cancun, scheduled for testing from Jan. 17, is aimed at reducing transaction fees and introducing bridge and staking pool features. It will incorporate Ethereum Improvement Proposal (EIP) 4844, a method for enhancing the efficiency of rollup networks by temporarily storing transaction information in a "blob" format, thereby substantially reducing layer-2 transaction charges.
Ether's recent surge can be attributed to an uptick in network and ecosystem usage, dominance in Dapp deposit, and the anticipation of further enhancements through upgrades. These advancements are predicted to strengthen Ethereum's position in smart contract processing and staking mechanisms. Just as a disclaimer, investment and trading entail risks- always perform your due diligence when investing.
Published At
12/29/2023 1:05:18 AM
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