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- Ethereum hit a new all-time high of over $1,430 on Tuesday, surpassing Bitcoin’s 26% year-to-date gain.
- Directly tied to its explosive growth is the rise of projects built on Decentralized Finance, or DeFi.
- Ethereum users receive over 4% in annual interest, while traditional banks offer less than 0.5%.
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The price of https://markets.businessinsider.com/currencies/eth-usd?utm_source=markets&utm_medium=ingest” target=”_blank”>Ethereum shot past $1,430 on Tuesday, hitting a new all-time high for the cryptocurrency powering the world’s largest smart contract platform.
Ether, the native cryptocurrency of Ethereum’s blockchain network, has already soared 81% year-to-date to reach this latest peak, only a couple of weeks after its crypto cousin https://markets.businessinsider.com/currencies/btc-usd?utm_source=markets&utm_medium=ingest” target=”_blank”>Bitcoin reached a new high near $42,000.
Ethereum’s gain clearly shows it has outperformed Bitcoin’s 26% rally so far this year in their respective US dollar pairs.Its positive momentum indicates how projects built on decentralized finance, more commonly known as DeFi, are creating a more scalable infrastructure for smart contracts rather than relying on brokerages, exchanges, or banks.
That the world’s second-largest cryptocurrency by market capitalization has hit a new high indicates the beginning of DeFi “eating traditional finance,” said Hsuan-Ting CEO of Furucombo, a DeFi money lego application.”More and more people adopting it signals a great future for the industry regardless of whether people are using ETH to pay for something or just holding it to capture the network’s value,” he said.
Over $25 billion worth of crypto assets have been locked into DeFi applications built on Ethereum over 2020, https://defipulse.com/” target=”_blank”>according to DeFi Pulse.The sector now offers loans, synthetic stocks, interest-earning assets, exchanges, derivatives, options, and credit systems.
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Ethereum’s users are already able to receive more than 4% in annual interest, while traditional banks offer below 0.5% interest, as well as gaining exposure to various derivatives products that have an inherently global market due to the openness of public blockchain infrastructure, according to Sergey Nazarov, the co-founder of the world’s largest DeFi project Chainlink.
“When you consider the 10X growth in DeFi’s market size, the consistently higher rates of return from DeFi financial products when compared to banks and the inherently global nature of DeFi financial products, together with the devaluation of traditional assets through high inflation and unchecked money printing, anyone can begin to see that DeFi is where the next flight to safety will happen and is in fact one of the existing forces that’s driving adoption of cryptocurrencies like Bitcoin and Ethereum today,” Nazarov said.
Ethereum has always been the lesser known rival to Bitcoin for a mainstream audience, according to Samantha Yap Founder & CEO at YAP Global.
But an increased awareness and understanding of what it’s about shows it could get gradually adopted as the DeFi industry grows.
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