Ethereum (Ethereum - ETH)
Ethereum is the second largest digital currency by market capitalization and is considered the backbone of much of what happens in the Web3 world, including decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized applications (DApps).
✨ Reasons for consensus and expected momentum (the fundamentals):
The consensus on Ethereum does not come from short-term speculation as much as it comes from its position as a 'digital infrastructure', and there are three main pillars supporting this consensus:
1. Layer 2 architecture (second layer solutions)
* The problem that was solved: Ethereum was suffering from high gas fees and slow transaction speeds.
* Solution: The emergence of Layer 2 solutions (such as Arbitrum, Optimism, and Polygon) has shifted a significant amount of activity to these faster and cheaper networks.
* Consensus here: These networks still rely on the security of Ethereum, enhancing the value and importance of the underlying currency (ETH) as a final settlement layer. Growth of Layer 2 is growth for Ethereum.
2. Deflationary mechanics
* The Merge: After transitioning to a Proof-of-Stake (PoS) mechanism, Ethereum became more energy-efficient.
* Burn mechanism (EIP-1559): A portion of transaction fees is "burned" and removed from circulation. This, along with the significant decrease in new ETH issuance for miners, means that Ethereum may turn into a net deflationary currency during times of high activity. This reduces the supply over time.
3. The largest and strongest ecosystem
* Liquidity and security: Ethereum has the largest number of active developers and the highest total value locked (TVL) in decentralized finance, making it the most liquid and secure among smart contract networks.
* Innovation: The largest metaverse projects, blue-chip NFTs, and lending and borrowing platforms continue to evolve and build on the Ethereum network, ensuring a continuous flow of capital and users.
| Feature | Description | Its impact on price and momentum |
|---|---|---|
| Layer 2 solutions | Increasing Ethereum's speed and reducing transaction costs without sacrificing security. | Increasing usability and attracting more users and projects. |
| Burn mechanism (EIP-1559) | Burning a portion of transaction fees permanently. | Reducing the supply of ETH and increasing its scarcity in the long term. |
| Transition to PoS | Making the Ethereum network more environmentally friendly and reducing coin issuance. | Improving the currency's image as a sustainable asset and encouraging staking.
⚠️ Very important note (risks)
Despite strong fundamentals, Ethereum is not immune to market risks:
* Competition: Faces strong competition from other Layer 1 networks such as Solana, Avalanche, and BNB Chain.
* Technical delays: Delays may occur in
Implementing Ethereum's future roadmap (such as Sharding).
* Market regulations: Any regulatory decisions from major governments may negatively impact the entire cryptocurrency market.
