“4 million Dai was just minted with WBTC in a single transaction. This really showcases the latent demand for non-ETH assets, and it’s the beginning of a broader trend of DeFi acting as an economic vacuum that will eventually attract almost all value to the Ethereum blockchain,” Christensen wrote in a comment that went crypto-viral among ETH supporters.
4 million Dai was just minted with WBTC in a single transaction. This really showcases the latent demand for non-ETH assets, and it’s the beginning of a broader trend of DeFi acting as an economic vacuum that will eventually attract almost all value to the Ethereum blockchain.
This is a similar assertion to one made by Andrew Keys, managing partner of Digital Asset Risk Management Advisors.
Keys wrote in a ConsenSys blog post published at the start of this year that Ethereum has a “market opportunity estimated at well over $80 trillion” because the blockchain basically has “infinite use cases.” The investor, formerly an executive at ConsenSys, added:
“We will be able to trustlesstly and digitally represent fiat, gold, software licenses, equity, debt, derivatives, loyalty points, reputation ratings, and much much more that we can’t even conceive of yet.”
Dependent on ETH 2.0
Although Christensen is convinced Ethereum will capture billions (maybe trillions) of dollars worth of economic value over time, as it stands, the blockchain will have trouble doing that.
As noted by the analyst “Ceteris Paribus” on May 15, the cost to send Ethereum has effectively quadrupled since the end of April, rising to 41 Gwei as of the time of his post from the 10 Gwei baseline where the metric normally sits. This equates to around $0.20 to send ETH from address to address. (According to ETHGasStation
, fees remain around the levels indicated in Paribus’ post.)
Gas prices on Ethereum have been skyrocketing over the past month. Average gas price is now 41 Gwei, up 4x since end of April.
While the fees are still not ludicrous per se, they highlight that even at pre-bull run transaction levels, Ethereum is running into potential scalability problems.
What we tend to forget is that the ability to send and receive value is not exactly the primary function of ETH. Instead, the primary function of the cryptocurrency is to interact with smart contracts, meaning high fees can make certain decentralized applications basically unusable, say, if you’re spending $1.00 on a $5.00 function.
Hence why the ETH 2.0 upgrade is so important.
For those unaware, Ethereum 2.0 is basically an overhaul of the blockchain that will implement technologies like Proof of Stake, sharding, and more to exponentially increase the speed, transaction throughput, and decentralization of the network.
While the jury is still out on how exactly this upgrade will help Ethereum’s usability, it’s slated to remove at least two of the many crucial barriers preventing mainstream adoption: high fees and low transaction throughput.