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Why is ETH silent in the DeFi carnival?



(Blooming Orchard, Van Gogh)

Recently, it has been basically a feast of DeFi. From Kyber to Compound, a series of DeFi projects have emerged one after another, constantly breaking new highs. The overall market value of DeFi has exceeded 5.5 billion US dollars. This breakthrough is not only a breakthrough in its market value, but also a continuous increase in business volume.

(Even for COMP, the total deposits and total loans of Compound increased several times within a week)

Data: Binance’s daily inflow of Bitcoin rose to 338, and ETH’s daily outflow dropped to about 1,200: On December 19, according to Bloomberg News citing CryptoQuant data, there were 338 net inflows of Bitcoin into Binance on Sunday, while The daily net outflow on December 13 exceeded 40,000; on Sunday, the net outflow of ETH slowed to 1,183, while the net outflow on December 13 exceeded 278,000. [2022/12/19 21:54:00]

For example, the amount of locked assets of Compound was less than 100 million US dollars a week ago, but now it has exceeded 500 million US dollars, surpassing Maker to become the project with the largest amount of locked assets in DeFi.

(The total amount of assets locked in Compound exceeds 500 million US dollars, source:DEFIPULSE)

Data: FTX sent 50,000 ETH to Voyager: On October 18, Nansen monitoring data showed that at 5:04:11 Beijing time, FTX sent 50,000 ETH (approximately $66.5 million) to the cryptocurrency lending platform Voyager on-chain address. [2022/10/18 17:30:21]

This speed of development is somewhat magical. You must know that DeFi has always spent a lot of effort to exceed the total asset lock-up of 1 billion US dollars. The previous breakthrough of 1 billion US dollars basically relied on the rise of ETH, but this time it broke through easily.

However, at the time of the DeFi carnival, as the public chain on which DeFi was built, ETH fell into silence. Recently, many readers of Blue Fox Notes are asking: What happened to ETH?

Analysis | ETH fell back to near the lower line of the ascending channel and is expected to start a rebound: According to huobi market, ETH is currently trading at $282.66, an intraday drop of 1.09%.

In view of the current trend, analyst Potter said that in the weekly trend, ETH has formed a large arc bottom structure from August 2018 to the previous period. In the past two weeks, it tried to break through the long-term arc neckline suppression, but failed The stable currency price fell again, and the weekly line closed with a super long upper shadow line. The upper part encountered strong selling pressure, and the amount of decline was also enlarged simultaneously. It basically established the situation of continuous adjustment for a period of time in the future, while the daily trend, BTC Since it stood at $130 in early March, it has been in an upward channel and has been oscillating upwards. Recently, it has risen sharply and touched the high point of the upper line of $366. To the lower line of $270, which is also the upper support area of the previous shock box range, the daily MACD is at a high dead cross, and the adjustment of the daily line level will continue in the near future. Once the heavy volume falls below the key support of $270, the currency price will fall further The space for exploration will continue to open. If there is a slight upward shock along the trend line, then there may be a chance for a short-term rebound. The upper resistance is $300 and the support is $270. [2019/7/2]

Stablecoin Pull Vs ETH Crowdfunding Pull

Quotes | ETH has fallen by more than 2.50% in 1 hour: According to Bitfinex data, ETH is currently quoted at $146.00, with a drop of more than 2.50% within 1 hour, with large fluctuations, please do a good job of risk control[2019/1/10]

The crowdfunding token of the project in 2017 was ETH, which greatly stimulated the demand for ETH. After 2018, the ICO model basically failed and turned to the VC model. For most of the early participants in this mode, it is impossible to participate.

For example, Compound raised more than $30 million from VCs, less than a year after the last round of financing of $25 million, and now they hold tokens worth more than $500 million, with a return of more than 17 times in less than a year. Is this really a better model than ICO? For VCs, yes. Because only they can participate in the early days.

And the 2020 round has seen the most usage of stablecoins so far, not ETH. There are billions of dollars of stablecoins flowing on Ethereum. Curve’s stablecoin trading volume has remained high in the past two days. Its total transaction volume in 7 days reached 115 million US dollars, approaching Uniswap’s 224 million US dollars. Super other DEX.

(DEX's seven-day trading volume ranking, source:duneanalytics)

The most profitable mining tokens on Compound are USDT and USDC, accounting for the vast majority of shares.

As can be seen from the above figure, stablecoins, not ETH, are currently dominant in Compound’s liquidity mining. This is completely different from crowdfunding in 2017.

The opportunity of ETH is coming in Phase0

At present, it will take some time before the full launch of phase 0 of ETH2.0. I don’t know if it will be at the end of August or before the end of the year. In any case, it is still under testing, so the temporary dormancy is understandable. Once the arrival of phase0, the arrival of PoS mortgage, and the subsequent arrival of EIP1559, the demand for ETH may far exceed the original demand of ICO. The subsequent feast may not be inferior to today's DeFi.

The two engines are still gathering strength

The cycle relationship "Encryption Cycle and Value Flow" that Blue Fox Notes talked about last time is currently in a small cycle stage, and a large cycle requires the driving force of a large engine. At present, the two major engines in the encryption world are Bitcoin and Ethereum. Bitcoin’s engine is accumulating in the halving effect and macroeconomic changes, Ethereum’s engine is in the launch of ETH2.0 and the continuous evolution of DeFi. These two engines are gathering strength. Once the two engines are ready, their power is so powerful that it cannot be compared with today's DeFi. Of course, the future of DeFi is another matter.

Judging from the fees captured by public chains today, except for Ethereum and Bitcoin, the fees of other public chains are almost negligible. It’s also important to note that Ethereum’s fees are now not only more than Bitcoin, but far more than Bitcoin. If the road of Ethereum is widened in the future, it will only be able to capture more fees. From this perspective, the Ethereum engine will not be inferior to Bitcoin in the future, and it is not impossible to surpass Bitcoin.


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