What’s Hot in Crypto this Week?
Ethereum. Now, here’s the deal. Bitcoin is the blockchain everyone knows. It was the first cryptocurrency and blockchain platform, and as such it remained synonymous with the idea of digital currencies. Its fame and status have kept it in first place in terms of market capitalization (= number of coins x price), which has grown to over $213 billion.
But Ethereum is the one everyone is using. Ethereum was the first cryptocurrency to introduce a blockchain system that could also facilitate all sorts of “decentralized applications,” or dApps. It opened the door for all of the blockchain use cases that Bitcoin, which is only intended for the transfer of its digital asset BTC, doesn’t allow for.
What does the data show?
Ethereum is an especially powerful platform for building decentralized finance applications. A zoomed out view of all ETH and wETH token activity on Ethereum reveals that more transactions are happening on decentralized platforms than on centralized exchanges. (See here for more: https://bit.ly/34S4PD3)
To be exact, $300 million worth of ETH and wETH are sent daily to decentralized finance applications and exchanges, vs. the $156 million to centralized ones.
Where is this money going? Uniswap.
Uniswap is a decentralized exchange built on Ethereum. It lets users exchange cryptocurrencies without the need for a third party. As its founder, Hayden Adams, explains, Uniswap is an immutable smart contract, which means it cannot be changed by a party unilaterally.
Uniswap currently dominates the decentralized finance space — over 70% of daily deposits to decentralized finance applications are going to it. That’s about $211 million out of the $300 million total.
What’s Flipside’s take?
Some people in the blockchain world believe that Bitcoin will inevitably become a monopoly because of “network effects,” and that building any other project or cryptocurrency is not only futile, but unethical (see this post for a nice example). This line of thought is known as Bitcoin Maximalism, and its adherents are the only ones still denying the value of decentralized finance applications.
Bitcoin Maximalists are not taking decentralized finance seriously, mainly because they can’t take part in it if they stay glued to the Bitcoin blockchain.
But the truth is, the number of Bitcoin holders who are moving their BTC tokens over to Ethereum is rapidly increasing. We found that $385 million worth of wBTC and renBTC (which are Ethereum-compatible BTC) is transacted daily on Ethereum.
That number was just $131 a month ago.
The Flipside Crypto Asset Score Tracker provides institutional and sophisticated retail investors the ability to track over 500 cryptocurrencies’ fundamentals. FCAS Tracker is currently free to a select group of new users as it continues to develop the product. Visit Flipside here to gain access to Flipside Analytics.