Ethereum has started 2021 with a bang seeing it’s price double in the past 3 weeks. Ethereum usually follows bitcoin’s lead in price moves but the past few days has seen ETH continue to climb while Bitcoin has been relatively stable. Part of this divergence can be explained by ETH simply playing catchup with Bitcoin but there is also growing excitement around the ecosystem and its price potential.
Earlier this month Real Vision CEO Raoul Pal tweeted:
Network affect aside, Ethereum is the base layer for DeFi which is also a huge driver of the most recent price moves. With DeFi users are now able to access more sophisticated services such as lending, insurance and yield farming all on chain. DeFi is also providing a strong use case for utilities such as LINK and GRT that will provide an on-ramp for other industries.
LINK is the token for Chainlink which is a decentralized oracle protocol. An oracle is the mechanism by which external data such as stock prices are supplied to smart contracts. A mature and robust solution for oracle data is a prerequisite for wide scale adoption. GRT is the token for The Graph protocol. The Graph organizes and exposes blockchain data using the popular API framework GraphQL. This greatly reduces the technical barriers for any application that wants to interact with the Ethereum network.
Also worth mentioning is the launch of Ethereum 2.0 in December called the Beacon Chain. This is the first step in the move away from a proof of work to a proof of stake consensus algorithm. PoS promises to greatly improve scalability once implemented.