Ethereum Ethereum succeeded.
This morning, ETH broke above $2,400 and is trading at $2,414 at the time of writing, up 8.47% in 24 hours. Meanwhile, Solana’s price fell by 15% to $104 from its December 26 high of $123.
Between the rise and fall, the community shouted “Ethereum is finally resurrected”, and if Ethereum is given a script, the competition between it and the “fierce rival” Solana must be the most talked about drama in the crypto field.
The reason for the “resurrection” of the Ethereum ecosystem
At present, the crypto industry has entered a critical period of bull and bear alternation, and the market has gradually returned to caution from frenzy and excitement.
Bull and bear cycles alternate further
It can be seen from the market sentiment index on the BlockBeats website that since October, the news of BitcoinSpot ETFs and various protocols and inscriptions in the Bitcoin ecosystem have pulled the crypto market out of the bottom of the Bear Market in 2023 Bull Market Non-fungible Token.
But in this process, the prices of Bitcoin and Ethereum, the two mainstream tokens, have maintained a range-bound trend, but new things in the ecology have obtained exaggerated price increases, such as the Ethereum inscription ETHS once exceeded $16, 000, which was 6-7 times the price of Ethereum at that time, and the madness of the market can be seen.
However, as the market for inscriptions, hailed as the starter of this bull market, is weakening, people realize that the current value anchoring development of inscriptions is still immature. The entire crypto market is still in the transition stage of bull and bear alternation, there has been a short-term rise myth, and there will be a green and yellow disk performance, and every crypto project with a narrative and ecology will run out in this period to brush up on the sense of existence, so the price Fluctuation of Ethereum is a normal reaction at this market stage.
On December 28, Grayscale officially posted on social media that ETH generated strong returns (over 80%) in 2023, but underperformed BTC and certain other Smart ContractBlockchainToken. The ratio between the ETH and BTC price indices recently reached its lowest level since mid-2021.
In fact, most smart contract platform tokens have risen less than Bitcoin this year, and ETH is basically in line with this peer. The CryptoSector Index is up about 94% in 2023, only slightly outpacing ETH’s gains. “Although ETH lags behind Bitcoin and certain other crypto assets in 2023, it still outperforms traditional asset classes,” Grayscale said. Therefore, we believe that the Rebound in ETH should be seen as evidence of the expansion of the Crypto Assets recovery. 」
Solana ecosystem funds repatriate
Another factor that cannot be ignored in the rise of Ethereum prices is the loss of funds from its “fierce rival” Solana.
Last week, BitMEX founder Arthur Hayes reported receiving a revelation from God while meditating, instructing him to dump SBF-backed Token SOL and expressing his affection for Ethereum founder Vitalik. The price of Ethereum briefly rose that day, but then the market’s attention remained on the Solana ecosystem.
During this time, the frenzy of meme coins such as BONK, WIF, and SILLY on the Solana chain has allowed DEXs such as Raydium and Jupiter to obtain ultra-high returns. On December 16, the DEX transaction volume on the Solana network was about $1.475 billion, surpassing the Ethereum network’s $1.164 billion, and the weekly transaction volume reached $6.429 billion, an increase of 52.75%, which once became a strong proof that the community believes that Solana will filp Ethereum.
On December 26, according to DefiLlama data, the Solana ecosystem DEX Raydium protocol fee reached $161 million in the past seven days, surpassing the Bitcoin network protocol fee ($102 million) and the Ethereum network protocol fee ($76.59 million) to rank first. However, according to the latest data, it can be seen that Raydium’s 7-day agreement fee has slipped to fifth place, and its high point has fallen by 70%.
The price change in SOL also shows that Solana’s strong performance is slowing down, and SOL Market Cap is now down to fifth place, with its price falling 16% from its high of $123 on December 26 to $103.
Price performance is always the most sensitive reflection of market conditions, and currently in the unstable bull and bear alternation period, hot money will always choose to ambush where there are more wealth opportunities, and Ethereum’s opportunities are next year.
Cancun upgrade and ZK L2 Airdrop expected
The Cancun upgrade is currently considered by the market to be an important Node for the re-emergence of the Ethereum ecosystem. The Cancun upgrade is an additional upgrade to the ETH Blockchain in Shanghai, and the highly anticipated EIP-4844 proposal will enable Ethereum L2 to achieve drop cost and speed increases, resulting in 10x faster and potentially 100x faster and lower costs for Ethereum Layer 2.
Related Reading: How Will the Layer 2 Market Landscape Evolve After Cancun’s Upgrade?
If the Cancun upgrade can successfully drop the cost of trading on the Ethereum, combined with the Ethereum ecosystem’s well-established infrastructure, the price increase in Ethereum at this time is the first shot expected to land.Ethereum
In a post on the Ethereum Research forum this morning, Vitalik Buterin proposed three ways to simplify EthereumPoS design, including Decentralization staking pools, two-tiered staking, and validator councils.
In addition to the fact that this is considered by many to be a key factor in the price increase in ETH this morning, the Token of Ethereum Layer 2 projects has also seen a general rally, and the total Lock-up Position volume (TVL) of the Layer 2 is now at the $20 billion mark, an increase of 23.06% on the 7th.
The Airdrop expectations of Starknet and zkSync in the Layer 2 zk camp have also brought new attention to the Ethereum ecosystem, and on December 1, the Starknet Foundation confirmed a screenshot showing the draft Airdrop plan and said that it had made a AirdropSnapshot. Previously, with the Layer 2 “PUA” rhetoric triggered by Blast made other Layer 2 Ethereum realize that they must act so as not to be abandoned by the market, so next year these Layer 2 with technology and Airdrop expectations will form a consistent market sentiment with Ethereum.
What are the potential opportunities?
Since next year’s Ethereum ecosystem is so exciting, what opportunities can we wait for in advance?
OP ecology
Optimism is the vanguard of this round of Ethereum ecological price recovery, on December 27, the OP rose to $4, and the current price is $3.84, continuing to hit an all-time high, and the 24-hour increase extended to 18%.
OP Stack is the killer feature of Optimism, understood as a set of Open Source software components that enable anyone to build their own Layer 2 Blockchain on top of Ethereum using optimistic rollups. It moves most of the computation and storage off-chain while relying on Ethereum for security and finality, and technically, Optimism is mainly reflected in the fact that it actually saves users a lot of on-chain fees.
Related Reading: Crazy Multi-Chain Universe, Crazy OP Stack
Previously, more than a dozen projects such as opBNB, Zora, Base, Wordcoin, and DeBank announced that they would join the OP Stack camp, and the popularity of Base has been seen from friend.tech, while projects with many user bases such as Wordcoin and DeBank may receive more market attention in the future.
At present, the OP ecological projects with high market attention include AMM protocol Velodrome Finance and lending protocol Sonne Finance. According to DeFiLlama data, Velodrome V2 TVL is currently $150 million and Sonne TVL is $48.87 million, both of which have risen in the past seven days. According to CoinGecko data, Velodrome’s native Token VELO is currently priced at $0.076, up 69.9% in 7 days, ranking 699th in Market Cap, and Sonne’s native Token SONNE’s current price is $0.1, up 60.8% in 7 days, ranking 1369th Market Cap.
In addition, the meme coin on the OP is also worth paying attention to, and TUX, the hottest in the community, calls itself the first optimistic cat, according to DEXSCREENER data, the current price is $0.005601, a 24-hour increase of 204%.
ARB Ecosystem
In a Warpcast post today, Vitalik said, "It’s great to see that one rollup has entered Phase 1 this year (and several projects are very close to Phase 1). This is true Decentralization progress, and hopefully next year will see ten Rollups enter the first phase and achieve some degree of sequencer Decentralization. From the screenshot posted by Vitalik, it can be seen that the rollup that entered the first phase is Arbitrum.
According to Vitalik’s initial proposal at the Ethereum Magicians Forum, the L 2b eat subsequently outlined the definition of phased development of rollups, compared with stage zero, the first phase of rollups must meet five conditions:
- A complete and fully functional attestation system has been deployed;
- At least 5 external participants can submit proof of fraud;
- Users do not need to obtain the help of an authorized operator to achieve withdrawal;
- Users have at least 7 days to withdraw if an actor more centralized than the Security Council implements an unnecessary upgrade;
- The Council was properly established.
As the leader of Layer 2, Arbitrum is the first project to be actively mentioned by Vitalik in this Node, which is an ecosystem worth paying attention to, and the price of Arbitrum also responds well to the market, as of press time, the ARB price is $1.63, a 24-hour increase of 19.61%.
The Arbitrum ecosystem has always been considered to be the most active existence in a Layer 2, and crypto KOL Blue Fox Note pointed out today that with the large-scale decline in fees after the Cancun upgrade, Arbitrum will gradually evolve into an application center for Web3 games, Social and other aspects.
xpet that has recently swept the Twitter comment area is a social game xPET on Arbitrum, recently xPET officially updated the White Paper, introduced PVE\PVP and other features, the game ecology is gradually enriched, and its Token XPET price has also broken through new highs, the current price is $2.47, a 24-hour increase of 93%.
Metis Ecology
In addition to Arbitrum, there is also Layer 2 Metis, which has seen an impressive increase in price and TVL recently.
On December 18, the MetisDAO Foundation announced the creation of an approximately $100 million fund to accelerate the growth of its ecosystem. The fund, called the Metis Eco Development Fund, will allocate 4.6 million METIS Token to be used for “sequencer Mining, retrospective funding, deployment of new projects and other efforts.” In addition, according to the official blog post, Metis expects to become the first Optimistic Rollup of Decentralization Sequencers early next year, and the allocation time of the Metis Ecological Development Fund will take place a week after the launch of the Metis Decentralization Sequencer.
Crypto researcher HaoTian believes that the core business logic of Metis is very simple, since the OP-Rollup has stopped at the Decentralization problem of sequencer, as a relay, proposing a reasonable set of Decentralization Sequencer solutions is its market space. Therefore, it is also worth looking forward to the performance of Metis next year.
The most popular in the Metis ecosystem in recent times are Hummus and the meme coin project VMUM. The Hummus protocol is a one-sided AMM built on Metis that allows users to swap Stable Coins with very low losses, and its native Token is HUM. Users can stake Stable Coins to earn HUM and use the staked HUM rewards to increase the yield of staked Stable Coins. VMUM, a meme coin under the name “Mother Vitalik”, was deployed on December 19th.
Related reading: “Up more than 190% in a week, what are the potential projects worth paying attention to in the Metis ecosystem”
On December 5, Bankless founder Ryan Sean Adams posted a long post on social platforms, saying: "Some people say that the price of ETH is as high as $2,200, which is really funny… ETH has not yet entered a bull market. At the same time, he pointed out that Ethereum’s fundamentals are strong, and the current Ethereum has not yet realized its true value.
This remark sparked a wave of Ethereum controversy in the crypto community at the time, and in retrospect, the focus of the debate may be answered more clearly next year. Talking about Ethereum Ethereum, it is better to say that Ethereum has not changed anything, it is this market that has changed.
