Why is Ethereum likely to continue growing? Three reasons answer this
According to a report published by the blockchain analytics firm IntoTheBlock, the second-largest cryptocurrency is likely to continue to grow, although Ethereum is currently in a corrective state after reaching a new all-time high above $ 1400.
Here are several reasons why Ethereum will continue to grow:
1- The growth of the decentralized finance industry, DeFi:
According to the report released by "IntoTheBlock", there are several reasons that are likely to drive the growth of ETH in the near future.
The first is the adoption and development of DeFi projects.
Decentralized finance apps (DeFi) are dapps that provide financial services without any middlemen.
Many are also preoccupied with the “Yield Farming” mechanism that enables them to lend cryptocurrencies to other projects and reap their profits.
The industry turned into a large-scale industry and flourished in 2020, despite the emergence of the first decentralized application of decentralized finance in 2017.
The majority of DeFi's decentralized financing protocols and projects are located on the Ethereum blockchain and the most popular metric for monitoring the growth of DeFi projects is the amount of “TVL” locked funds.
Locked Funds “TVL” represents the total amount deposited in the smart contracts that run the DeFi applications.
A year ago, TVL was valued at approximately $ 840 million.
A few days ago, TVL's value reached a record high of $ 25 billion.
This is a 29-fold increase over a 12-month period.
This indicates the rapid growth of the ecosystem. Among the most prominent leaders of the decentralized financing stream, we find:
“Compound” and “Uniswap” ...
2- The expansion of the Ethereum network:
Thanks to the growth of the DeFi funding arena, a rise in the number of Ethereum transactions has been observed.
Over the past few days, according to the "IntoTheBlock" report, 1.17 million daily Ethereum transactions were observed.
This has also stimulated the growth of active daily Ethereum wallets, at a rate of 550,000 transactions per day and this represents 100% growth compared to January 2020.
As for the number of non-zero Ethereum wallets, it has increased significantly.
As of January 21, 2021, there were 51.79 million wallets with an Ethereum balance, representing 50% growth over the previous year.
3- Shrinking the supply of Ethereum in trading platforms:
This is the last aspect that the "IntoTheBlock" report believes is important for Ethereum to continue its exponential growth, as Ethereum's supply has declined rapidly lately.
Last month, large amounts of Ethereum were withdrawn from central trading platforms.
On two specific days, January 14 and 20, 620 thousand and 695 thousand respectively found their way from trading platforms to offshore portfolios.
The demand for Ethereum is increasing, and soon the community may face a supply crisis.
More Ethereum is locked up in DeFi applications, which have reached over 6.9 million, at present.
The number of Ethereum deposited in Ethereum 2.0 smart contracts is also increasing, reaching 2.5 million Ethereum recently.
On February 8th, the Chicago Mercantile Exchange plans to launch Ethereum-based futures contracts, which will further expand Ethereum's expansion and continued growth.