Ethereum’s blockchain network is on track to settle more than $ 1 trillion in transactions in 2020. According to data from Messari and CoinMetrics, the network settled $ 989 billion in value for the year.
Julien Bouteloup, a decentralized finance security developer and auditor (DeFi), said
Ethereum is now the dominant settlement layer in cryptography and is about to settle more than $ 1 trillion in 2020. ETH is about to overtake BTC at any time.
– Julien Bouteloup (@bneiluj) October 25, 2020
Comparing Ethereum to Bitcoin is difficult because the latter is a store of value and a currency. In contrast, Ethereum is a smart contract blockchain protocol that processes many types of data along with transactions.
Still, the data shows Ethereum’s rapid growth rate and DeFi’s impact on smart contract blockchains.
The great effect of DeFi on Ethereum is noticeable
2020 was the year of DeFi, at least from June to September. After the launch of Compound’s COMP token and Yearn.finance’s YFI token, the DeFi market exploded.
The rise of governance tokens has fueled a new DeFi cycle. As a result, more users began to use decentralized exchanges like Uniswap, migrating to decentralized applications.
Decentralized applications require users to pay a transaction fee whenever data is processed. As an example, let’s say a user buys 1 ETH using 408 Tether (USDT) on Uniswap. The purchase order must be processed on the Ethereum blockchain network in order to be registered as a transaction.
As many people started using Uniswap and other decentralized exchanges, demand for Ethereum started to increase. As the number of daily transactions on the blockchain started to increase, of course, the amount transferred through Ethereum started to increase in parallel.
In the past two months, after the DeFi market correction, the Ethereum blockchain has slowed slightly. Daily active users decreased and the sum of fees spent per day also decreased.
But in the long run, especially if the DeFi cycle returns, analysts predict that the Ethereum blockchain will become more active again.
A major obstacle in the last DeFi cycle was the blockchain network Ethereum’s inability to efficiently process a large number of transactions.
Thus, according to the network update ETH 2.0 materializes and the DeFi cycle returns, Ethereum will likely begin to establish more value.
Eric Wall, CIO of Arcane, said the environmental argument surrounding mining could also benefit ETH as it moves to the stake. Him said:
Ethereum is going to walk massively in “it’s an environmental cryptography that doesn’t use as much electricity as a country the size of Ireland” me. True or not, no education will stop this, regardless of how ETH2 actually progresses.