Ethereum is seen as the cynosure of the crypto economy by a cross-section of analysts. The intersection of the metaverse, DeFi, and NFTs are considered as factors for its claim for the top spot. Ethereum will have to battle its “killers” before it can assume the role of King in the cryptocurrency economy.
The events of 2021 have triggered deep conversations about the future of cryptocurrencies and the part that it is to play in the wave of innovations. At the heart of this buzz lies Ethereum, the second-largest cryptocurrency with myriad use cases.
Center of the Crypto Economy
Ryan Watkins, a researcher at a top analytical firm, Messari has pitched his tent with Ethereum in the debate of which cryptocurrency will occupy the central spot in the space. He took to Twitter to espouse his unwavering belief in the asset’s ability to play a significant role despite its shortcomings.
“Market suddenly realizing $ETH is a bet on: Internet Money, The Metaverse, DeFi, NFTs, and Web 3 all rolled into one powerful asset,” Watkins said. “$ETH is the center of the crypto economy.”
It is hard to fault his opinion especially with the recent events around the network. Facebook’s foray into the metaverse sent Metaverse tokens prices parabolic as Ethereum-based platforms around the metaverse surged in value . Sandbox and Decentraland spiked following Facebook’s announcement and at the center of it all lies Ethereum. Since the announcement, Ethereum has gone on to set a new all-time high of $4,638 while trading volumes for the asset now hover around $15 billion.
NFTs became mainstream in 2021 and guess what was the driving force behind it – Ethereum. Ethereum is seen as the de facto home of DeFi as several protocols are hinged on the network with Ethereum accounting for over 69% of DeFi TVL. The network currently plays host to over 3,000 Dapps and as the world marches on towards a decentralized future, Ethereum already has its foot in the door.
Not So Fast, Ethereum
Ethereum still has a long way to go before it flips Bitcoin which controls 43.01% of the market share. For all its impressive figures, Ethereum has 19.5% of the market and will have to double its share before it comes close within striking distance of Bitcoin.
There is also the age-long problem of Ethereum gas fees which can stifle the network’s quest to become the center of the crypto economy. Rising gas fees have resulted in the migration of projects to ETH killers like Solana and Polkadot .
One user comments that “high gas fees have been a thing forever now” and wonders why the network is still dominant. Perhaps, institutional investors have seen the end game and are continuing to buy into the asset.
The solution to its rising gas challenge is on the horizon with the development of Ethereum 2.0 in full gear. Altair upgrade was successfully launched at the end of October while other upgrades are being lined up ahead of the Merge.