The price of Ether has surpassed the $2000 mark on various cryptocurrency exchanges, marking another major milestone for the smart contract blockchain and its native token.
The second biggest cryptocurrency by market capitalization has long been considered the younger sibling of the preeminent Bitcoin, but this in no way diminishes what Ethereum has developed into over the past five years. This is evident in ETH setting a new all-time high over $2000 and the integral role it is playing in the blockchain application and decentralized finance (DeFi) space.
Ether has seem massive growth in value over the past six months, from where it was trading in the region of $300 to $500 before setting off an journey of constant new price discovery alongside Bitcoin and the wider cryptocurrency markets as well as conventional stock markets as well.
Ether’s market cap and price has appreciated massively since the start of 2021, growing by more than 160%.
DeFi is fueling Ethereum’s growth
Industry analysts and commentators have attributed Ethereum’s continuing success, both in value and utility, to the development of various DeFi platforms and applications. The DeFi ecosystem is being tipped as the nascent backbone of finance, where people are able to stake, borrow and swap cryptocurrency without the need of a financial institution.
Ethereum’s smart contract functionality has allowed the world’s development community to explore the world of decentralized finance, and the success of these platform’s that are executed on the Ethereum blockchain has added credence to its utility.
Ethereum is also undergoing a metamorphosis from a proof-of-work to a proof-of-stake consensus protocol, which will greatly increase the blockchain’s transaction processing speed and capacity, improve security and sustainability.
The transition to Ethereum 2.0 (Eth2) is anticipated to greatly improve the network’s scalability with an aim to support thousands of transactions per second in order to make applications faster and cheaper to use – as reported by Cointelegraph earlier this year.
This should help the DeFi space meet the growing demand of users that it has garnered over the past year. Data from DefiPulse estimates that over $42 bln worth of value is locked into the combined platforms and projects that make up the DeFi ecosystem.
Many of the top DeFi platforms are running on the Ethereum blockchain, including decentralized exchanges Uniswap, Curve Finance and Sushiswap and lending platforms like Maker and Compound.