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- Ethereum tumbled 7% on Wednesday after hitting a new high of more than $ 1,430.
- The rise of projects built on Desentralized Finance, or DeFi, is directly linked to its explosive growth.
- Ethereum users receive more than 4% interest annually, while traditional banks offer less than 0.5%.
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Ethereum fell 8% on Wednesday after hitting $ 1,430 a day earlier and setting a new record for the cryptocurrency that powers the world’s largest smart contract platform.
The price dropped from 1150 GMT to $ 1,265, breaking the previous day’s record.
Ether, the native crypto-currency of Ethereum’s blockchain network, has so far risen 33% to reach its latest high, just weeks after its crypto-cousin Bitcoin reached a new high near $ 42,000.
The profit of Ethereum clearly shows that so far this year it has been better than the 26% appearance of Bitcoin in their respective US dollar pairs. Its positive momentum indicates how projects built on decentralized financing, better known as DeFi, create a more scalable infrastructure for smart contracts, rather than relying on brokers, stock exchanges or banks.
According to Crypto Samantha Yap, founder and CEO of YAP Global, the cryptocurrency has always been the lesser known competitor of Bitcoin to a mainstream audience. But a greater awareness and understanding of what this is all about shows that it can gradually adopt as the DeFi industry grows.
That the second largest cryptocurrency in the world has reached a new high through market capitalization marks the beginning of DeFi ‘eating’ traditional finances’, said Hsuan-Ting, CEO of Furucombo, a DeFi money lego application. . “More and more people are adopting it, indicating a great future for the industry, whether people use ETH to pay for something or just hold on to capture the value of the network,” he said.
According to DeFi Pulse, more than $ 25 billion worth of cryptocurrencies are locked into DeFi applications built on Ethereum over 2020. The sector now offers loans, synthetic stocks, interest-earning assets, exchanges, derivatives, options and credit systems.
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Ethereum users can already receive more than 4% in annual interest, while traditional banks offer less than 0.5% interest, as well as exposure to various derivative products that have an inherent global market due to the openness of public blockchain infrastructure, according to Sergey Nazarov, the co-founder of the largest DeFi project Chainlink in the world.
‘Taking into account the 10X growth in DeFi’s market size, the consistently higher rates of return on DeFi financial products compared to banks and the inherent global nature of DeFi financial products, coupled with the devaluation of traditional assets by high inflation and uncontrolled money pressure. “Anyone can begin to see that DeFi is the next flight to security and that it is in fact one of the existing forces driving the adoption of cryptocurrencies such as Bitcoin and Ethereum today,” Nazarov said.
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