ETH Seems Very Strong - But Why?

Some of you may be wondering why Ethereum seems strong, and I'll try to provide some important information as to why this may be the case.

1. The ecosystem is the most vibrant. It has, by far, the most:

Decentralized applications & money locked (according to DeFi Llama)

It also has the most amount of builders/developers (according to ChainDebrief, 2023)

Per CoinMarketCap, the Ethereum Layer 2s have more money than any major Layer 1 right now.

1. The currency (Ether) on its blockchain is shrinking in supply every single minute (according to Ultrasound dot Money website). Contrast this with the dollar, which is inflating in supply every minute and debasing the dollars in your pocket (refer to debtclock website).

Ether is deflationary, and you can see this play out live on ultrasound dot money's site.

1. Ethereum is environmentally sound (proof of stake upgrade [merge], 2022)

Ethereum the blockchain is not wasting nearly as much power as bitcoin by intensive mining requirements, and currently uses even less power than YouTube (according to DigiConomist)

1. Coinbase

Coinbase is effectively ETH aligned, in my opinion, and I back up this claim because they have chosen to build their Layer 2, called BASE, literally on top of Ethereum’s Layer 1 network (according to Coinbase dot com).

Coinbase is the biggest crypto entity in the US because it is the largest crypto exchange by market cap.

1. Ethereum's Revenue

In my opinion, this point is crucial. Ethereum the blockchain is profitable, making tens of millions per week (according to cryptofees dot info). Gas fees are high on L1 (according to ultrasoundMoney), so why don’t people stop using Ethereum and find another chain, you ask? If I had to guess why, it would be because of reasons 1-4, but I'm not an expert; DYOR.

1. Dencun upgrade March 13 (according to Ethereum dot org)

This means even cheaper L2 gas fees are right around the corner, coming March 13 (refer to Ethereum's website to back up this claim).

1. YIELD! (staking metrics, refer to DefiLlama)

People can grow their ether share just by staking it. I believe this is massive because it's not fake yield from protocol issuance that you see in chains like ada or algo, which are inflating and issuing yield through token issuance (refer to their respective websites to learn how the yield is issued. For algo, it's through chain subsidy, for ada, it's through delegated proof of stake).

On Ethereum, the yield is from actual inflows, from layer 1 burning fees (you can see these exact numbers on ultrasound dot money).

1. It's got the best economic security (over $100b locked, per Defi Llama, and no other chain but bitcoin comes close).

2. Spot ETF hype

Speculative, so I won’t put much emphasis here. But if it goes through, it's believed by some, including me, that the coin will do better, just like how bitcoin did. This is pure conjecture, and I don't have any sources citing whether or not the ETF will go through, or whether or not the ETF will be good or bad for the price. This is just an interesting point, so do with it what you will.

I could go on with other great benefits the ethereum ecosystem and chain offer. ETH has the most prolific and culturally recognized art (cryptopunks, bored apes, anonymice, two bit bears, squiggles, pudgy penguins... refer to Opensea's liquidity, trading volume, and floor price to discover that no other chain comes close to ethereum on these metrics) and the most memetic memes aside from Doge (for example, shib, Pepe, etc., which you can find on coinmarketcap), not to mention the memes on its L2s ($TYBG on Base L2, as an example). Gaming is developing quickly here too, as you can see by IMX and their large game platform (refer to IMX's website for more info here).

I’m missing so much more, so do your own research to fill in these gaps.

So if you’re wondering what the difference is between a L1 like cardano, ripple, etc., I hope this answer helps clarify some of that confusion.

Thanks for reading! And congrats BTC all time highs that happened just yesterday.

Edit: Thanks for the great comments! One commenter reminded me about EIGENLAYER!

1. Eigenlayer. It's staking a second time, basically. You take your staked ETH derivatives (liquid staked tokens, or LSTs) and deposit them into Eigenlayer, thus, RESTAKING. You get even more yield on top of the regular yield you get from LSTs. Eigenlayer is absolutely swallowing ETH into its deposit pool, further lowering the ETH supply and increasing activity on the ETH blockchain (source: eigenlayer.xyz).

This also attracts ETH holders to want to stake and restake their ETH to earn real yield. Of course, this isn't without its smart contract risks, just like everything else I've mentioned above.

It goes without saying, none of this is financial advice and please do your own research before buying any cryptocurrencies.