KEY POINTS

  • The increasing use of decentralized finance (DeFi) require ETH to fuel them
  • Half of Argentina's money supply would create 13.58B DAI that would need ETH to be valued at least $2,500 to $10,000
  • The U.S. money supply would create 403.4 billion DAI

At an $18 billion market cap, Ethereum (ETH) is still far from its most famous counterpart in Bitcoin (BTC), which is presently valued at $158 billion.

And while that's slightly better than Twilio's stock, a trillion-dollar market cap, a case for ETH that was brought up by Mythos Capital founder Ryan Sean Adams, is still a long road ahead for the altcoin.

A lot of analysts agree with Adams and believe that Vitalik Buterin's creation will overtake BTC at some point. The trillion-dollar market cap is just another one, and it all points to what ETH can do.

Money protocols

Adams pointed to the increasing use of DeFi or decentralized finance that exceeded $700 million in total locked value. MakerDAO and Compound also make use of Ethereum's permissionless financial infrastructure. 

And with those projects and the growing consumption of ETH's economic bandwidth, Adams stated, "All of these money protocols require permissionless, trustless value to fuel them. And where does that value come from? It's not US Dollars. It's not Bitcoin. It's Ether."

A Trillion Dollars

The trillion-dollar figure Adams arrived at was due to a mass adoption scenario wherein DAI served a country like Argentina. The $26.64 billion money supply reported by the country in October 2019 would be converted to a circulating supply of 13.58B DAI -- that is if DAI captures 51 percent of that money supply.

"Assuming the above collateralization ratio and the current price of ETH at ~$150, the MakerDAO system would need 226.4M ETH locked (208.4% of the total liquid supply) in order to supply the 13.58B Dai," he said.

For Adams, the only way for MakerDAO to supply those billions of DAIs is to increase the economic bandwidth of ETH, but Ethereum needs to be between $2,500 to $10,000. DAI is the stablecoin created by MakerDAO.

Ethereum has a long way to go to reach $2,500, let alone $10,000. However, when considering the numbers Adams applied, that's only half of the money supply of one country. Adams also put forward a case where DAI captures a country like the U.S. where the money supply is $4.034 trillion -- that would create 403.4 billion DAI.

Still, these numbers are far from where ETH stands currently. At the moment, ETH is priced at $166.