Ethereum Forecast From Former Citi Trader Has Arrived!
Former Citi trader and TradeBlock research head JohnTodaro1 says DeFi is becoming widespread and positively impacting Ethereum.
Former Citi trader: DeFi spreads and positively impacts Ethereum
John Todaro, former Citi trader and TradeBlock head of research, believes DeFi in Ethereum has become mainstream. DeFi, short for decentralized finance, saw exponential growth in the second half of 2020. Defipulse data since June 1 shows that the total value locked on DeFi protocols has risen to over $ 3.4 billion. JohnTodaro1 adds the following to his comments on the subject:
DEFI IS GOING MAINSTREAM. THESE ARE ALL VERY GOOD SIGNS FOR ETHEREUM.
With the launch of the Compound DeFi protocol in early June, the demand for DeFi services has increased significantly. Currently locked in value is $ 250 to 500 million in promising protocols including Aave, Balancer and Curve Finance. The rapid growth of the DeFi space could continue to reinforce Ethereum’s outlook.
Why is the rapidly growing DeFi market increasing demand for Ethereum?
Researchers at TradeBlock highlighted that since 2019, users have often used Ethereum as collateral on DeFi platforms. Therefore, users often buy Ethereum to access DeFi services . The researchers said:
YEAR ON YEAR, THE AVERAGE MONTHLY GROWTH RATE IN NET NEW ETH ADDED ON DEFI PLATFORMS WAS APPROXIMATELY 17%. IN THE FIGURE BELOW, WE SHOW THE NET AMOUNT OF ETHER FLOWING TO DEFI PLATFORMS EACH MONTH. LAST YEAR, AN AVERAGE OF MORE THAN 125,000 ETH WAS ADDED TO DEFI PLATFORMS EACH MONTH.
On average, researchers found that around 125,000 ETH was added to DeFi platforms each month in 2019. At a price of $ 390, this means about $ 48.75 million in new capital per month. This figure rose significantly in 2020 as demand for both DeFi and Ethereum increased. From July 1 to July 31, the value on DeFi platforms increased from $ 1.87 billion to $ 3.91 billion. In a single month, the DeFi space added more capital than the full 2019.
Demand for both DeFi and Ethereum is growing rapidly
If DeFi’s upward trend continues, by the fourth quarter of 2020, researchers say Ethereum demand may exceed the new supply. The researchers said:
OUR CONSERVATIVE FORECASTS SHOW THAT DEMAND FOR ETHREUM ONLY FROM DEFI SERVICES IN NOVEMBER 2020 COULD OUTSTRIP THE NEW SUPPLY. THERE ARE ALSO A VARIETY OF OTHER DECENTRALIZED APPLICATIONS (DAPPS) THAT CAN CAUSE MORE ETHER DEMANDS SUCH AS GAMES, MEDICAL DAPPS, AND OTHERS.
There are two optimistic narratives that reinforce the sentiments about Ethereum. The first is the positive trend of the DeFi space, and the second is ETH 2.0. Cryptocurrency investor Andrew Kang said on the subject:
THE LAST YEAR WAS THE BEST TIME TO MAXIMIZE EXPOSURE TO DEFI. NOW IS THE BEST TIME TO ACT. PRICES HAVE INCREASED, BUT SO HAS INVESTMENT.
Demand for both DeFi and Ethereum seems to be growing, but what’s missing is scalability and blockchain capacity. It faces competition in the Proof of Stake (PoS) space against blockchain networks that include Ethereum, Cardano, and Cosmos.