Category: Ethereum

USDC stablecoin is in the limelight

On By mehranmuslimiblogIn DeFi, Ethereum, StablecoinsLeave a comment

It’s noticeable that in today’s leading cryptocurrency press, i.e. Coindesk and Cointelegraph, the USDC, a Circle stablecoin, is receiving a lot of media attention.

Cointelegraph has a story based on recent Messari research, which has revealed that USDC is growing much faster than Tether in 2021 and is “emerging as the dominant stablecoin on Ethereum thanks to its popularity in DeFi.” The stablecoin has also taken a chunk of Tether’s market share, and researcher Ryan Watkins predicts that in the coming weeks, this could result in Tether’ share of the stablecoin supply on Ethereum falling below 50%.

Watkins also pointed out that half of the total USDC supply is now sitting in smart contracts and is worth around $12.5 billion. It has also become “the preferred dollar-pegged asset staked in smart contracts in DeFi protocols,” he says. Messari estimates that more than 40% of the stablecoin supply on Ethereum is USDC.

The USDC supply has surged by more than 1,820% since the beginning of 2021 when there was just 1.3 billion circulating and currently stands at about 25 billion, according to Circle’s figures.

One of USDC’s attractions now is a new product called Compound Treasury, which is offering 4% interest on USDC to institutions. Furthermore, This week Coinbase announced it would pay 4% interest on USDC holdings, giving the stablecoin a further boost.

More blockchains to adopt USDC

Meanwhile, over at Coindesk the focus is on USDC adoption by more blockchains. At the moment it is native to four blockchains, but the report says, “We anticipate that in the coming months USDC will become available on Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos, and Tron.”  Following USDC’s launch in 2018, it expanded to Algorand, Stellar and Solana in 2020.

The USDC administrator, CENTRE, which is a consortium run by crypto exchange Coinbase and payments firm Circle, said expanding to other chains helps “drive individual and enterprise adoption of open blockchain technologies.” The announcement also said, “We anticipate that USDC on these blockchain platforms and multichain protocols will further accelerate the use of the world’s fastest growing digital dollar currency.”

The potential expansion to other blockchains follows announcements “showing momentum behind USDC as an interest-generating savings vehicle.”

Integration of USDC into other chains won’t happen immediately, but will probably be spaced out over the rest of this year.

Ethereum will be the smart contract global standard

On By mehranmuslimiblogIn Ethereum, Smart Contracts1 Comment

Benzinga, a fintech company that provides market news and data to retail and crypto traders, published its latest survey earlier in June, titled “Ethereum Predicted to Become the Global Standard Smart Contract Blockchain.”

The firm surveyed data from 100 cryptocurrency investors and traders, and the data collected revealed some very good news for the Ethereum blockchain, because over 50% of those surveyed “believe that Ethereum is poised to become the global standard contract blockchain.”

The survey says, “Out of 100 investors polled, 56.7% said Ethereum, 20.6% said Cardano, 8.2% said the Binance Smart Chain and 14.5% reported other platforms.” That certainly puts Ethereum solidly out in front of its competitors and the so-called ‘Ethereum killers’.

What makes the investors so bullish on Ethereum? They responded, “decentralization, application ecosystem and scalability” play a role in the decision, although they also revealed that ‘scalability’ was the most important factor, and ‘decentralization’ the least important.

The ‘scalability’ factor is interesting, because that refers to processing times and lower gas fees, the latter having been a thorn in Ethereum’s side recently. Scalability has also been a problem for the leading smart contract blockchain, but this does not seem to have deterred these investors from seeing a bright future for it, and a belief that it will overcome the gas fee and scalability issues with Ethereum 2.0, which is on its way. The fact that it is the main blockchain for DeFi projects also plays an important role in infusing investors with confidence in the product, because it has first mover advantage.

However, Benzinga does offer some words of warning for newer retail investors: “Ethereum’s struggle to upgrade from proof of work to proof of stake has been highlighted by high gas fees and harsh criticism from environmentalists. This chink in Ethereum’s armour has been targeted heavily by Cardano and the Binance Smart Chain, and only time will tell if the flaw is fatal. For now, Ethereum is still home to the largest DeFi ecosystem, and layer 2 solutions show promise to scale Ethereum before the ETH 2.0 mainnet goes live.”

On the other hand, the fact that investors remain the most bullish on ETH suggests that traders have faith in the Ethereum Foundation’s ability to successfully complete the 2.0 scaling upgrade. This is not to say that Cardano and Binance Smart Chain will not have an opportunity to claim some of Ethereum’s market share, but if Ethereum is widely seen as the ‘gold standard’ for smart contracts, their work will be so much harder.

Has Ethereum’s time to shine arrived?

On By mehranmuslimiblogIn crypto, DeFi, EthereumLeave a comment

If you compared the crypto market to the music charts, it would be fair to say that no artist has ever managed to hold the No.1 position for as long as bitcoin has. Ethereum (ETH) meanwhile, has been holding the No.2 spot for such an extended period that is was doubtful this might ever change. Until now!

Those who are ETH holders and supporters have been disappointed that this blockchain has had to be content with playing second fiddle to BTC for so long. Surely its position as the bedrock of DeFi must indicate it is no poor relation? Now it seems that ETH is on a new trajectory into the limelight, something its fans welcome.

Everybody talks about bitcoin

It is true that BTC has been most people’s entry point into crypto, with the more adventurous diversifying into ETH and other altcoins after time. As Katharine Wooller writes, “I am interested to note that most of the more vociferous fans of crypto from the traditional banking industry (i.e. Blackrock, Citi, Goldman Sachs, JP Morgan) tend to limit their comments to Bitcoin.” This is also true of the MSM, when they do write about crypto – it’s all about the bitcoin, even though the journalists assigned these stories still appear to know very little about cryptocurrencies in general.

The market tells a very different story. This year and last, ETH ‘wiped the floor’ with BTC, as Wooller says. “In 2020 the appreciation was more than double – Bitcoin’s gains were a non-too shabby-240% vs Ethereum’s stratospheric 450%.”

Furthermore, ETH has only fallen below its initial price against BTC for the first five months of its existence in 2015.

Yes, BTC’s market cap does dwarf that of ETH, but that’s not the only data to look at. Since January 2020, Bitcoin’s dominance has fallen from 69% to 56% whilst Ethereum’s has risen from 7% to 12%. 

Ethereum has a great use case

The use case is another aspect to consider. BTC has become widely accepted as a store of value and “thus heir apparent to our current economic system.” Wooller correctly states. Ethereum’s utility on the other hand is more complex, and perhaps less comprehensible for retail investors. However, its smart contracts have the powerful potential to provide us with a huge variety of innovations in finance, gambling, gaming, advertising, identity management, and supply chain. As Wooller says, “Personally, I see Ethereum’s potential market as greater than Bitcoin’s albeit hard to explain to someone new to the industry!” I think most ETH owners would agree with that.

It is time that not just the crypto media, but also the MSM, gave ETH and the Ethereum blockchain more oxygen, so that the public can understand its potential. It has an excellent spokesperson in its creator, Vitalek Buterin, unlike BTC, which only has the mythical Satoshi.

I agree with Wooller when she says, “Recently Ethereum has broken two all-time highs in quick succession this April. I would expect, therefore, in the medium term to see more investors and treasuries alike increasing their Ethereum holdings.”

It’s time to give Ethereum the limelight it deserves.

The PoW versus PoS debate

On By mehranmuslimiblogIn Bitcoin, Blockchain, EthereumLeave a comment

The current big question in the battle between bitcoin and Ethereum, as ETH plans to move from Proof of Work to Proof of Stake, is which works best: PoW or PoS. although it has been an ongoing argument, it has been given some fresh prominence due to the steps Ethereum is taking to speed up the move.

Simon Chandler asks: “While the Ethereum developers have decided that PoS is the best way forward for Ethereum, the question remains as to whether it might offer advantages to Bitcoin, which, as a store of value, has different aims.”

According to Chandler opinion is quite divided in the crypto community: those supporting PoW believe that it is better fro Bitcoin, because it offers greater stability and security. The PoS supporters say that PoS offers similar security, and that it provides more simplicity and scalability, which is very important.

It also has less of an impact on the environment compared with transactions on the Bitcoin blockchain. Pierre Rochard commenting on Twitter wrote, “When Ethereum switches from proof-of-work mining to proof-of-stake, they’re going to push the “green” anti-Bitcoin narrative *hard*. It’s going to be well funded and highly coordinated. If you thought the 2017 scaling debate was ugly, this is going to be much much nastier.” Needless to say, the tweet brought up a lot of differing responses.

Chandler contacted a confirmed Bitcoiner who responded by saying the PoW vs. PoS debate isn’t even worth addressing, adding, “I don’t use shitcoins.” Those who are less partisan see both Proofs as having their own strengths and weaknesses, although it would seem ther is a consensus that PoW is better for Bitcoin.

The main ‘weakness’ with the PoS model is that it is “theoretically more prone to centralization and has the inherent security issue of using the native tokens of a blockchain to decide the future of those tokens or the blockchain,” according to Mike Collyer, CEO at Foundry, a crypto mining finance company. And even those who support Ethereum acknowledge that PoW has its strengths. Lex Sokolin, co-head at Ethereum-focused major blockchain company ConsenSys said, “One of the strongest advantages of proof of work is that it has worked as the chassis for cryptographic security for over 10 years, and now secures a trillion in value. It is technically and economically complex, which plays a role in attracting specialized mining companies to the work of maintaining the network.”

However, Sokolin also said, “Proof of stake is an easier-to-understand system, which allows easier participation through the staking of capital. It is also able to achieve similar security outcomes without the electricity consumption of the proof of work mechanism, and has been proven to work through a number of smaller but functional crypto economic networks.” He also explained why PoS is better for the Ethereum network, which is aiming to provide the digital infrastructure for a future decentralized/crypto-based financial system. “The blockchain-based economic activity that we see is now far above and beyond moving one type of value around on a single protocol. Rather, we see software executed by a global network across payments, lending, banking, investing, and insurance substitutes,” Sokolin said, and stated that this is the main reason Ethereum needs to move to PoS.  But it seems that this is a debate that will rage on in the crypto community for some time to come.