Ethereum Price: $181.65Ethereum Price (BTC): 0.021618BTC Market Cap: $19.73BETH Network Dominance*: 69.12%7 Day Candle**: $186.35 / $189.96 / $177.25 / $181.65 The latest Coin Metrics State of the Network issue raised a fascinating insight into the Ethereum ecosystem: Ether, the blockchain’s native token, now accounts for less than half of the total daily transactions across …
It seems like the more I browse crypto subreddits, the more I notice the same trends. Every top 20 coin feels like they're going to topple BTC as the king. Coincidentally all the moon posting bulls all have huge bags of their coin. Hmmm.
I went to another crypto sub a couple weeks back. Its astounding how similar of an echo chamber it is to how ethtrader was. I think this sub has stopped as much circlejerking than in the past though, but this post is definitely meant to be a masturbatory feel good one.
It's only logical to assume tokens on top of Ethereum would be the ones having more transactions as time goes by and more scalability and tx/s are increased. When ETH 2 comes along, this figure will certainly skyrocket with a game like Gods Unchained running at the scale of Hearthstone can easily have several times more transactions per second than raw Ether transactions, that was the whole point of Ethereum. This happening is not proof that Ether is either being used as a store of value.
I started rading this "article" and frankly, I don't think you do this sub a favor by posting such low quality pieces. The author uses a lot of lame, buzzy catchphrases but stumbles in inconsistencies and never really explains anything to back up his arguments.
Example for inconsistencies:
[...] sharing none of the store of value characteristics of gold.
... next sentence:
It is possible to argue that Ether is digital gold. It is also possible to argue that Ether is digital oil. In fact, Ether is all this and more.
Threre are a lot more examples of this. The text is a mess.
Excellent post Mr_Yukon it's things like this that make you truly marvel at what lies before us. We are creating a transaction based economy whos fuel is ETH, whos use-cases are nearly unlimited and whos tokens that are used for fuel are also income generating... The future is bright 🕶️
Ether’s problem (and it’s a good problem to have) is that there is no real-world analogy to describe the vast value with which it possesses as an asset
Best real world analogy IMO is adenosine triphosphate (ATP). ATP is the energy currency, the competition for which drives traditional biological evolution similar to how our surrogate currencies drive the human technological branch of bio evolution. ATP can be wrapped in biological "smart contracts" like glucose to facilitate transport and glycogen for long term store of value, but without transacting in it, the chemical processes inside the body would not run precluding the superstructure built on top of these processes that relies on that economy. I wish more economists/governance theorists would study biology as the human body alone represents a homeostatically balanced resource economy between 30+ trillion human cells and 100+ trillion bacterial cells, all with varying requirements.
That's a really artificial analogy. Economy is not a nature science. There are fundamental differences between both fields. Chemical compounds are just that, chemical compounds, acting in a deterministic manner. Their interactions, if broken down to simple processes, can be understood and predicted statistically. Economy is a lot more complicated and different approaches are necessary.
Actually, I am not sure what you want to say with this comparison?!
Holy shit you thought that was something? Read the comments below!!
I understood about 0% of that, but I’m smart enough to know that, if people who even know what those things are are hanging out here, it’s gotta be a good sign.
That’s quite a good analogy, although ATP is broken into ADP to release the energy whereas from the user’s perspective, ETH is permanently spent.
I prefer the biological dynamical systems analogy you drew.
It's definitely not a perfect analogy, but to the specific chemical reaction's perspective, the ATP is spent, ADP is then used elsewhere or catabolized back to ATP to be recycled in the economy. From the ETH transaction perspective, ETH spent goes to miner reward to be recycled in the economy. The mitochondria are like the miners in this analogy.
Another difference that could be argued would be that ATP is a "stable" currency, in that its value is pegged to the physical property of the Gibbs free energy stored in its phosphate bond (really the energy released when the terminal bond is cleaved and phosphate bonds with water). While true in a vacuum, this isn't the whole story as the amount of energy released is dependent upon environmental factors such as the concentrations of ADP/ATP/Pi/Mg2+ which results in markedly different values in vivo. Anyway, I think it's a decent analogy.
Intelligent response. Have you read it through?
I read probably equal amounts about ETH and BTC. They both have their place. It actually doesn't make sense to place all our eggs (store of value, smart contacts, stable coins, bank transfers, supply chain) in one basket (ETH), especially when the developers have too much say over the protocol. If that was the right thing to do, then it would have already happened*
Too many tribes in crypto.
If your investment thesis is contingent upon treating ETH as a method of exchange to replace fiat currency or BTC, you’ve always been wrong. And if you can’t adjust your investment thesis, then yes, it’s time to sell.
Well I've been following this forum and /r/ethtrader for a while and there's been a lot of gloating over how average BTC transaction time went to a standstill and how superior ETH was in that manner. Seems that doesn't matter anymore.
How can I trust the evangelists of ETH when the narrative changes once a year?
According to the article ETH is no longer longer a digital transaction currency, but Store of Value. Sounds like a fallacy to me. That my reason for investing was wrong.
Maybe there still are good reasons though, I don't know
Hey, author here and that's a great question.
IMO ETH will be the dominant collateral type for years to come and (perhaps) indefinitely. It is the native Ethereum asset with the most security and price reliability. If ETH fails, DeFi fails and it was all pointless anyway. Whereas if BAT - or any other non-native asset - fails (which they reasonably could), the system will still go on - you'll just be out of pocket.
DAI's debt ceiling will reach the billions and ETH will make up the majority of that DAI issued. I struggle to see the alternative.
Allow me to respectfully disagree. ETH might be the dominant collateral type in the near future, but medium to long term I think the role of ETH will consistently diminish.
While I don't see ETH-based tokens play a dominate role, tokenised bonds, stocks, commodities and real estate needs to be major collateral types for DAI to really take of. There is simply not enough ETH to allow DAI supply grow to a relevant level.
Also, the only proven strategy for risk mitigation is diversification. In Maker's case diversification outside crypto assets. Also Rune argued along these lines at the stablecoin panel at Devcon5: [https://slideslive.com/38920100/panel-stablecoins](https://slideslive.com/38920100/panel-stablecoins)
A relevant level of DAI supply could be 1 percent of global M3 money supply. Let's say that is one trillion dollars. If we consider a collateralization ratio of 333%, that would mean 300,000,000,000 USD worth of ETH collateralized. If ETH goes 100x, that would bring ETH to approx. 18,500 USD/ETH. 16 million ETH would need to be locked in, i.e. 10-15% of total ETH supply. If ETH however goes up "only" by a factor of 10x, total ETH supply would not be sufficient to to reach that supply of DAI.
Interesting take. What would you say is a relevant level? The higher the price of ETH the more USD (DAI) that can be generated.
Real estate etc suffers the same problem as other collateral types but more pronounced. DAI is a decentralised system, the use of centralised collateral types with low levels of transparency and counterparty risk completely underine the security guarantees that make this tech so revolutionary.
Creating silos (as is being done) for each collateral type mitigates this nicely and does allow for users to (some day) leverage all kinds of assets, but they will never come close to the usage of ETH imho.
It is still early days, but counterparty risk could be kept in check if it is not the latest startup tokenizing everything (not saying this is bad, just that it is increasing counterparty risk) but companies, institutions and governments themselves. Think of a world where the equity of a S&P500 company, T-Bills or the US gold reserves are minted right away as ERC721 tokens.
I agree 100% with this answer.
Too many people fail to understand that in an early (multi-collateral) Dai environment, and likely even forever, that ETH will be, and remain, the dominant collateral type.
Great article! 👍
It is the one and only trust minimizing collateral type. I believe that it's more likely we see a MakerDAO fork to single collateral DAI (backed by ETH) before we see MCD diminishing ETH's role as a collateral type.
I've played with this in my head and actually feel that enshrining ETH into TX fees is \*far\* more costly to the UX than it is beneficial to holders.
ETH's value will accrue organically by the sheer volume of what's going on today and in the future. I'm not sold on 1559.
I agree. There is this notion in crypto that deflation is great, but to me it feels like a cheap trick to increase the price. Just leave inflation at a low, positive rate so new users can actually get some coins from somewhere.
Ideally supply should be tied to number of users or world's population.