ether (Ethereum)the world’s second-largest cryptocurrency has surpassed its larger rival Bitcoin (Bitcoin), up 33% year-to-date. This rally is Possibility of approval In a research note on Monday, broker Bernstein said of spot exchange-traded fund (ETF) investment amounts.
First, Ether supply is deflationary and has not increased since the advent of the Ethereum blockchain. shift The report said it will move to a proof-of-stake consensus model in September 2022, adding that this fact has been underestimated.
The amount of trapped ether is also an important factor. Bernstein points out that ETH held on exchanges is at an all-time low of 11%, indicating that more cryptocurrencies are being locked up. ETH is locked in the staking pool, decentralized finance (DeFi) smart contract And even more layer 2.
“Increasing ETH transaction fees due to increased blockchain activity (DeFi, NFT, token growth) is motivating more ETH holders to stake their ETH,” said analyst Gautam. Chugani and Mahika Sapra write.
“And as financial smart contracts (Arbitrum, Optimism, Polygon) on the Ethereum Layer 2 network expand, more ETH will be locked up in smart contracts, leading to a reflexive feedback loop of increased demand,” the authors write. is writing.
of lamina propriaThe protocol used to re-stake Ether, notes that it is also attracting more staking demand as “ETH (re-)stakers are profiting from new tokens/services launched on Eigen.” It is written in
Bernstein said that since the beginning of 2023, new layer 2 networks have brought scalability and low fees to the Ethereum network in the resurgence of decentralized finance.
With further clarity on token regulation, “application tokens, such as DeFi tokens, could potentially enable revenue sharing with token stakers,” the report said, adding that “a healthy DeFi ecosystem will continue to grow.” The accrual to ETH will “drive an increase in activity and Ethereum fees” and therefore bring more value.
of uniswap The fee switch proposal, which resulted in a 60% increase in UNI governance tokens, is cited as one example of how “token economic design” can be improved.
The last major catalyst is Denkun upgrade Development of the Ethereum blockchain is scheduled for March of this year. After the upgrade, “ETH contributors expect Ethereum’s Layer 2 transaction costs to be further reduced by 90%, increasing the profitability of the Layer 2 network,” the report added. This will reduce mainnet congestion and increase volume to the ecosystem.
read more: Ether could become the next ‘institutional darling’, says Bernstein
