Ethereans Reject DAO-Style Hard Fork. That's a Good Sign for ETH as Money
Hello defiers! This is what’s going in decentralized finance,
- Vitalik’s Twitter poll shows most Ethereans reject a DAO-style hard fork
- ETH/BTC ratio plunges again
- Record ETH locked in DeFi
“Intervention Never OK”
Vitalik Buterin asked on Twitter over the weekend how much ETH would have to be at stake in a hack for the community to support a hard fork and the majority said no amount would justify it.
Suppose a popular smart contract wallet that a large portion of the ETH community uses gets hacked. This could be reverted by reverting all chain activity since the hack and doing a DAO-style HF to recover the funds. How much ETH must be at stake for you to support this?
With 108 million ETH in circulation, the alternatives were less than 1 million, 1-10 million, 10-100 million, or “intervention is never ok.” 63 percent of almost 14,600 who responded chose the last option.
Just three years ago the Ethereum community decided to do a hard fork over about 13 percent of total ETH compromised in The DAO hack. Maybe Ethereans were traumatized enough by that experience that they don’t want to repeat it, maybe they have changed over the years, or maybe things are different when there’s more than hypothetical money at stake.
It didn’t take long for a debate to start over whether a hard fork would mean that ether is more or less useful as money. Chris Blec of DeFi Global said, “one minute ETH is money, the next minute it’s ok to revert thousands of transactions?” A developer who goes by the name @cyber_hokie said the U.S. government can seize, block, take, people’s bank accounts and the U.S. dollar won’t stop being money because of that; the difference is that banks can’t refuse government orders, but nodes can.
Governments can intervene in everything about how money is run, from monetary policy, to the flow of capital, to blocking people’s transactions. Banks don’t have as much power, but they also have some ability to control the movement of value. In some cases, intervention can bring benefits, like in the case of reversals when there’s fraud, or some could argue, economic stimulus. In others it results in severe loss, like when cash-strapped governments fuel inflation or directly seize deposits.
In all of those cases, as long as the currencies involved are still used to buy things, they don’t stop being money, but that doesn’t mean it’s something to strive for. The whole point of cryptocurrency was to build a type of money that’s better than those issued by central banks and controlled by multiple third parties. Ether probably wouldn’t stop being money of there was a hard fork, but if it’s subject to intervention then it just wouldn’t be a much better alternative than fiat.
Ether Lagging Bitcoin Rally Again
It was a rollercoaster ride last week for bitcoin. It slumped after U.S.lawmakers drilled Mark Zuckerberg over Libra, but then rebounded, briefly crossing $10,000, after Chinese president Xi Jinping made bullish comments about blockchain technology. All told, bitcoin rallied by more than 20 percent in the past week. Ether on the other hand, didn’t keep up and increased by about half as much.
That means that the ETH/BTC ratio, which had recovered from the lowest since 2017, climbing to as high as 0.022 in the past month, plunged again to 0.019 in just two days.
Image source: CoinMarketCap
So, will ether catch up and rally as much as bitcoin? That would be the case if the China news really meant the nation was loosening restrictions on cryptocurrency trading. But it doesn’t look like that’s going to happen. China might develop its own national cryptocurreny, but it’s unlikely that the centralized and authoritarian government will embrace public blockchains, while it tightens its grasp over every other aspect of people’s lives.
If the bitcoin rally was just based on this news, then there isn’t much there to hold it in place. Maybe ETH/BTC could rebound, but it’s more likely to happen because bitcoin pares recent gains. On the other hand, crypto markets are anything but rational.
Ether Locked in DeFi Makes New Record
Users are trusting record amounts of value in decentralized finance platforms.
There’s now a record 2.4 million ether locked in DeFi, surpassing the previous high of 2.3 million in April, according to DeFi Pulse, meaning that’s how much of the cryptocurrency users have put up as collateral in decentralized finance platforms. The amount of Dai in DeFi is just about 1 million Dai away from its September high.
Total value locked in ETH terms (which includes all tokens) is also at a record 3.4 million, while value in dollar terms is only about $70 million from its high of $684 million in June.
