Disclaimer: I am not a financial advisor, everything on this report is financial opinion. Please consult your financial advisor before participating in crypto.
Ethereum
2021 was a fantastic year for crypto, in particular Ethereum. Ethereum reigns as the second-largest blockchain despite the slew of competition from Binance SC, Solana, Avalanche. But it remains far ahead showcased by various metrics, and there are no signs of slowing down.
Total Value Locked
Ethereum ended 2021 with a Total Value Locked (TVL) of $153 billion and contains nearly 60% of TVL in crypto. Its nearest competitor Terra (LUNA) TVL, sits at $13.3b with 7% of the market. Despite the hype following emerging L1s they remain far from the king.
Revenue
Ethereum showcased impressive revenue in 2021 totaling $10.9b. The nearest L1 was BSC, which edged on $1.0b of revenue. There are four projects on Ethereum that post larger revenue than BSC. (Filecoin, Axie, Opensea, Uniswap)
Opensea, an NFT marketplace on Ethereum, saw a revenue of $1.5b in 2021 with the emergence of NFTs.
Layer 2s on Ethereum
Layer 2 protocols are taking traction, benefitting from Ethereum’s reliability and security. In the future, Ethereum may be a consensus layer for an extensive array of layer 2s that inherit low gas fees and fast TPS speeds.
Some top names are Polygon (MATIC), Optimism, Arbitrum, Loopring (LRC), and ZkSync.
Creator Earnings
Typically, creators on centralized networks like YouTube, Spotify, Etsy, and OnlyFans, only capture a portion of the revenue they create. As the creator economy on Ethereum begins to evolve, many creators will start to see the benefits of capturing a larger percentage of value utilizing a decentralized network. NFTs for artists is a prime example. Ethereum, as a whole, competes with prominent names in creator economies.
Eth Burning and Deflationary Pressures
EIP — 1559 upgrade has been burned 1.7 million ETH
at a valuation of $4.6 billion since early Aug 2021. Before EIP-1559, all ETH would remain on the network. Now, supply decreases with every transaction.
Even though Ethereum remains inflationary, the increasing demand sees days of negative issuance. With ETH continuously being locked away, bought for speculation, and utilized for gas fees, Ethereum’s deflationary pressures will exceed new supply.
Conclusion
Ethereum remains far ahead of its competition in almost all metrics. Moreover, it attracted the highest number of developers in 2021 that continue to build the ecosystem.
There are a few negatives for Ethereum, no doubt. Ethereum is slow, and gas fees are incredibly high. In addition, environmental mandates are beginning to add pressure to the “proof of work” consensus. But, Ethereum contains scheduled upgrades that will improve speed, lower gas fees, and see a switch to an eco-friendly “proof of stake.” Ethereum Consensus Network (formerly Eth 2.0) will be near completion in approximately one year.
So, what are we left with?
The largest and fastest-growing ecosystem in crypto
Significant deflationary pressures
The emergence of Layer 2 options
Dwindling supply
Hammered down ETH prices
Upcoming improvement upgrades to the network
The emergence of creator economy (NFTS, DAOs, music, writers, games)
It’s no wonder Cathie Wood and her team of quants forecast an ETH price of 180k by 2030.
2022 will be an important year for Ethereum upgrades. In the past, upgrades are often delayed and I expect no different this time. But, the process seldom detriments the network. So…
At its current price of $2680, Ethereum could be a complete steal, and far as the risk/reward ratio, it remains one of the best crypto investments.
Crypto Market Update
Volatility S&P 500 (VIX) highlights decreasing fears in the overall equity markets and is down 8% today. Crypto and equities have become strongly correlated in the past month of downward price action. A decrease of fear in equities equals decreasing fear in crypto.
Bitcoin (BTC) continues a steady climb to test a downward trendline. The Bitcoin downtrend could be over if the trendline breaks backed by large amounts of volume. Bitcoin ended the day at 38.3k.
Ethereum Dominance (ETH.D) increased substantially by 5.83% in the past three days.
Terra (LUNA) reverses its downward prices with a 9% recovery to $51.49. There exist proposals to increase the reserves on Anchor Protocol, Terra’s most popular Dapp. However, the reserves on Anchor dwindle as a 20% yield is increasingly unsustainable for the long term. The Wonderland (TIME) debacle seems to be concluding, which saw large amounts of UST offloading. The Terra ecosystem is releasing 200+ protocols in 2022 that will vastly increase demand for UST.
Notable Gainers (24h)
MANA $2.81 +17%
SAND $4.14 +10%
LOOKS $4.54 +9.5%
LUNA $51.32 +9%
AR $39.29 +9%
RNDR $3.45 +12%
TIME $377.61 +11%
Notable Gainers (7d)
SNX $5.74 +46%
FLOW $6.98 +33%
MANA $2.81 +32%
SAND $4.14 +32%
TELOS $.91 +67%
ANT $7.50 +60%
Bitcoin Fear and Greed Index: 26 Fear
“Bitcoin” Google Trends: 49 (signficant increase)
Bitcoin Options Max Pain (Mar 26): 45K
How to use The Fear and Greed Index for investing
Major Market News
Financial institution VanEck launches its first multi-token cryptocurrency fund. The firm, which manages $82 billion in assets, announced its newly created exchange-traded note (ETN) has exposure to Bitcoin, Ethereum, Polkadot, Solana, Tron, Avalanche, and Polygon.
After two years of development, Litcoin (LTC) is launching its highly anticipated Mimblewimble upgrade, opening the door to more privacy-oriented transactions on the network.
Despite resistance to continue crypto adoption in the US, Meta is widening services in Brazil. Meta has filed a trademark registration with Brazilian authorities to design, develop and provision hardware and software for various Bitcoin and crypto-related services.
The US Treasury will consider imposing KYC regulations on transactions involving self-custody wallets. The regulatory plan is likely connected to Biden’s executive order due to release in the coming days.
Thanks for reading fam!
Gabi
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