KEY POINTS

  • Despite new competing blockchains, Ethereum is still the top choice among developers
  • Fees have contributed to Ethereum’s growth
  • The total value locked in decentralized finance is now $26.55 billion

While Bitcoin has cornered the cryptocurrency narrative due to its parabolic increase in 2020, Ethereum might become the choice of many based on it being very different from Bitcoin’s store of value narrative.

Ethereum closed Sunday at $1,392, just shy of its previous all-time high. The second-largest cryptocurrency has grown 1,200% since March 2020 when 1 ETH was equivalent to just $80. Ethereum’s market capitalization currently stands at $160 billion.

The continuous demand for developers to continue to build on the Ethereum blockchain is a testament to its value, according to Cointelegraph. The majority of the cryptocurrencies were actually ERC-20 tokens built on Ethereum, despite new competitors coming to take the market away from the dominant blockchain.

The increase in transaction volume also makes the bullish case for Ethereum, the publication added, noting that in 2020 alone, $1 trillion worth of transactions were facilitated on the Ethereum blockchain. The total fees might have been higher had it not been for instances when transaction fees sometimes became exorbitant for small transactions. Nevertheless, the fact that users are willing to pay higher fees to get their transactions confirmed means the demand for the cryptocurrency is still increasing.

Decentralized finance or DeFi, which is composable finance without any need for any human intermediary, exploded in popularity in 2020, especially around August. Some of the DeFi coins have had higher prices, with YFI at one point having a price higher than Bitcoin. Decentralized finance also gave rise to automated market makers such as Sushiswap and Uniswap, both of which have airdropped tokens to their users. 

The total value locked in DeFi is currently $26.55 billion, with the majority locked in the Ethereum blockchain, according to DeFi Pulse. Cointelegraph noted that while DeFi has created a market that is free for all, interest from institutional investors may be coming to the sector. 

In a previous report, FundStrat valued Ethereum at $10,500 fueled by fees and DeFi. Still, there remain risks, including a potential bear market and any delay around the release of Ethereum 2.0.

Ethereum and Dollar Photo Secure your digital assets responsibly Photo: Pixabay