Scaling ETH 2.0 for DeFi (FREE)

Week 37: September 15, 2019

Every week we review Ethereum price drivers and perform both sentiment and technical analysis to help forecast the future.

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Week 37: September 8 - September 15, 2019

Ethereum performance this past week was greater than Litecoin (1.9%) and Ripple (-1.65%) but less than EOS (13.5%). Ethereum developers have continued their heated debates around ETH 2.0 and the future of Defi. In the meanwhile, we’ve issued a HOLD for the following reasons:

Rating: HOLD

Ethereum Market Cap: $20.36B

Ethereum Price: 4.1% ($181.36 to $188.80)

ETH Active Addresses: -3.0% (279.9k to 271.5k)

ETH On-chain Transactions: -6.9% (675.1k to 628.5k)

Technical & Sentiment:

  • ETH price is now trading at the top of resistance, in our target zone, let’s be careful here

  • Sentiment has exploded off the bottom, but it needs to hold if thus is the bottom

Positive Price Drivers:

  • The push for decentralized finance on the Ethereum protocol continues greater than ever with more Dai locked up in collateral than ever

  • ETH 2.0 developments push forward hope for market speculators around the longevity of ETH

Negative Price Drivers:

  • Declining active addresses and transactions suggest less market use and demand for paying fees

  • The network transaction fees may surpass that of Bitcoin for the third time in a year, making it less effective as a payment solution as its less secure than BTC


ETH Price Analysis:


On a macro level:

IF this happens, then we buy:

  • Vitalik Buterin confirms the positive momentum behind ETH 2.0 assuring mainnet launch occurs sooner rather than later

  • EOS, TRX and XTZ smart contracts fail to compete with ETH decentralized network development and adoption

IF this happens, then we sell:

  • Ethereum community sentiment shifts negative to Istanbul Hard Fork with transaction changes or developments with ETH 2.0

  • Upcoming EOS 2.0 launch steals market share among developers and users from ETH


ETH Sentiment:


Price Drivers This Week:

Over the past week developments around ETH 2.0 as the core backbone for decentralized finance has dominance the discussion. The community has yet to solve issues around transaction fees and Vitalik has little to offer till 2.0. Meanwhile, industry banking giant Santander has launched a full bond issuance completely on ETH, without concern for future scalability.

Preparing for ETH 2.0

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The development of ethereum 2.0 is moving faster than expected. With the total DAI locked in DeFi doubled since June, the network needs to start scaling.

According to the community roadmap, the upgrade will be done by the end of the month as all 7 blockchain clients have successfully connected.

Scalability

Developers have been working to solve the scalability issues for the past couple of months. For some time, ethereum devs have been trying to reduce the maximum size of the chain by reducing the number of transactions in a block, which would prevent a massive spam attack.

Currently, there are some major problems with the transaction backlog. As the DAI is more than double the number of transactions as the network currently and only 20 percent of transactions were confirmed.

Although the scaling solution has still not been adopted, some developers are working on the problem. A few years ago, developers decided to increase the number of confirmed transactions. They did so with the idea to introduce a small fee for the user, because they believe small fees will decrease the spamming attack. This fee of 0.5 cents is an easy way to reduce the spamming attack. Recently Vitalik has proposed raising the transaction fee.


Santander Banks on the Blockchain

Spanish bank Santander says it has become the first company to use a public blockchain, Ethereum, to manage all aspects of a bond issue.

The use of the ledger to store the value of the note and verify its authenticity is expected to help reduce overall costs and boost bond performance. The new system, known as a "smart bond," replaces many of the other layers in the bond issuance process, making it easier to oversee and offer value to a bond, according to Santander.

A smart bond, or SBS, is issued by a bond ETF — a security with a market value tied closely to an index for a specific country — and the issuer is responsible for securing a certain level of collateral and protecting the asset on the network. Those liabilities are recorded on the blockchain, the shared public record of all transactions.

Real Time

To make sure each bond is secured by sufficient collateral, Santander uses a smart contract-based system that relies on the blockchain to track the security level and make sure the bonds are in good shape. The bond's "security balance," or the amount of money deposited in the bond's security account, is available in real-time from the blockchain so creditors can view the security.


Ask and Answer

Trying to gain clarity around the Ethereum Development Foundation, Alex Sunnarborg posed several questions on twitter. Founder Vitalik Buterin responded.


What the top personalities on Twitter are saying:


That’s it for the Ethereum weekly report from Sep 8 - Sep 15, 2019. Make sure to stay tuned to get Mondays Price in Review report.

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