ETH is *Appreciating* Money With Bulls Raging on Solid Fundamentals
Also, smart wallet Authereum launches with goal of onboarding mainstream users to Ethereum, and Opyn brings options trading to DeFi.
Hello defiers! Here’s what’s going on in DeFi,
- Ether is surging and some bears are coming out of the woodwork, but fundamentals are there
- Smart wallet Authereum launches with goal to make logging in to Ethereum easy
- The first DeFi options market with Opyn
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ETH is *Appreciating* Money
The ether chart is going vertical. Can it continue climbing? There’s no timing the market and it might correct tomorrow, but the fundamentals are there.
ETH price is approaching $280 for the first time since July. Ethereum’s cryptocurrency is up more than 90 percent this year, while bitcoin is up more than 40 percent. Ether’s rise against bitcoin has pushed the ETH/BTC ratio to 0.026, the highest since also July. The entire crypto market’s is now worth more than $300 billion, up from almost $200 billion at the end of 2019.
Image source: Trading View and Gemini
Some traders are already starting to speculate there’s a pullback coming, as ETH short positions increased by almost 80 percent so far this month, while longs declined by more than 30 percent. Still, total long positions are about 6 times greater than shorts.
Image source: Trading View and Bitfinex
As is the case with most crypto bull markets, the rally started to pick up steam seemingly out of the blue and for no clear reason, with journalists pinning the move on everything from central banks devaluing their currencies to the coronavirus. I won’t try to speculate on what triggered the rally, but regarding Ethereum, the base layer for most of decentralized finance, I’ll say that fundamentals are strong enough to at least justify it —you’ll have to be the judge if they’re enough to sustain it.
DeFi Driving Ether Gains
Decentralized finance is one of the strongest fundamentals underpinning ether right now is. DeFi is putting pressure on the ether price because:
- The growing ecosystem is attracting more developers to build applications on top of Ethereum. The number of active projects, defined as those with more than 50 daily unique users, nearly doubled over 2019, according to Binance Research.
- Ether is used as collateral in DeFi platforms, and represents the majority of value held in the system. This reducing the amount of cryptocurrency in circulation. Right now, 3 percent of all ETH is locked in DeFi.
- Number of daily transactions on Ethereum have surged by more than 70 percent to almost 800k, according to CoinMetrics. That’s compared with bitcoin’s transactions increasing almost 40 percent to 250k.
- Transaction counts only include transactions in ether, which were recently surpassed by stablecoin transactions on the Ethereum network. That means total transactions are even higher. As with applications, transacting Ethereum’s non-native cryptocurrency, also requires spending ETH to pay for gas, which should out pressure on the ETH price.
Active Addresses Rise
- Active addresses on Ethereum have soared more than 70 percent to almost 400k this year compared with a 57 percent increase to more than 800k for Bitcoin.
Less Selling Pressure
- Selling pressure from ICOs has diminished as projects which raised money in the 2017 boom have already sold off most of their stash. They were holding only $5 billion of the $24 billion they raised as of January last year, according to a report by BitMEX.
Effect on DeFi
Valuer locked has continued growing as ether appreciates. There’s now $1.1 billion locked in DeFi platforms. While most of the value locked is in ETH, the net amount of ETH in DeFi has declined this month to 3.1 million from 3.2 in January, while Dai locked increased by more than 30 percent. It could be that some DeFi users are betting the rally has gone too far for now, and are cashing in their ETH. The rise in short sellers supports this trend.
Authereum Wallet Launches to Make Dapps Log in Easier
Authereum aims to make using Ethereum easier for anyone to use by enabling a single log in interface, with no crypto seed phrase required, for any dapp.
Authereum, which launched on the Ethereum mainnet yesterday, allows users to sign up with a username, email, and password in seconds, and deposit funds with a debit card through its Wyre integration. The non-custodial wallet can become the entryway to Ethereum dapps by enabling use from any browser, desktop or mobile, with no downloads required. Authereum is covering all transaction fees at launch.
The smart wallet raised $1.1 million from investors including 1confirmation, Coinbase Ventures, Republic Labs and Synapse Capital.
Options to Hedge Against DeFi Risk Are Live
The first options market for DeFi is live, meaning users have more tools to protect against potential downside. Opyn allows users to take out put options on Dai and USDC deposits on Compound Finance, giving them the ability to sell their positions at an agreed upon price in 12 months.
The Opyn frontend connects to the Convexity Protocol, a two-sided marketplace for tokenized ERC20 put options, called oTokens. DeFi users will be able to protect against technical and financial risks, or provide insurance to earn a premium on their ETH holdings.
[Read more on Opyn here: Defying the Biggest Market in Traditional Finance]
Announcing DAI Support for Coinbase Commerce: Coinbase
Coinbase Commerce merchants can also accept DAI as a form of payment by linking their online storefront to a Coinbase Commerce checkout, or in-person using the point-of-sale interface.
Decentralized finance tracker DeFi Pulse launches new system to speed up listing process: The Block
Aave was the first to go through the updated procedure. Four other projects – dForce, DeFi Saver, Numerai, and Robo Advisor for Yield (RAY) from Staked – are also building their project adaptors and will soon be listed.
It seems like Dexes are making new volume records every day:
DeFi Dude 🍪 (defidude.eth) @DeFiDude.@KyberNetwork passed $10M in 24/hr volume today. Pretty sure this is the first time any DEX has seen $10m+ in 24/hr volume, so hats off to Kyber and the entire DEX scene here in DeFi land. The growth just doesn't stop.1:48 AM ∙ Feb 13, 2020182Likes40Retweets
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The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.
About the author: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.