Is it time for DeFi to move beyond ETH?
DeFi’s total market capitalization stood at $15.8 billion against Ethereum’s market capitalization of $51.8 billion, at press time. This means that as of mid-November 2020, DeFi’s market capitalization is already over 30% that of Ethereum’s and it won’t be long before it explodes to surpass ETH’s own market capitalization.
Since its launch in 2015, Ethereum’s market capitalization has risen by nearly 600% in 5 years. On the contrary, DeFi’s has risen by a thousandfold. In fact, based on DCG’s 2020 survey, DeFi is one of the cryptocurrency market’s most bullish developments for the year 2020.
Developments such as these have only added to the hype that already exists around DeFi. DeFi projects with their competitive incentive schemes have lured investors in to park their funds in it. This can be established by the fact that DeFi’s TVL has climbed from $6.5 billion to $13.87 billion in a matter of just 90 days. Naturally, parallels between DeFi’s growth in 2020 and the ICO bubble of 2017 are expected. However, there are stark distinctions between the two.
Back in July and August 2020, DeFi’s increasing TVL and transactions contributed to severe congestion on Ethereum’s network. The congestion had a positive impact on Ethereum’s price and market capitalization all along. The spurt in transactions on the Ethereun network increased miner’s revenue and network fees, however, it also increased the popularity of the Ethereum Network.
The correlation between DeFi and Ethereum has also remained high over the past few months. As ETH 2.0’s launch draws closer, it is expected that locking in DeFi may give it a much-needed boost. However, in light of the fact that it possible for DeFi to surpass Ethereum’s growth, it is critical to consider that it may be the right time for DeFi to move on from the Ethereum network.
ETH has been a top project for a long time, #2 based on market capitalization all along and the #1 altcoin in the market. Alas, popularity hasn’t done much for Ethereum’s price of late. The expected improvements in the ETH network are all stalled and some much-needed ones will make an appearance in ETH 2.0. However, moving on from ETH will possibly give DeFi the space to expand further and continue growing explosively.
Bitcoin News Network