Just a quick post with three articles you might enjoy and my thoughts. Comments and feedback welcome!!!
1. What do people use Ethereum for? (Glassnode)
Bottom line: most ETH usage comes from scams and stablecoins, with a little DeFi mixed in. Three pyramid schemes—MMM, Forsage.io, and Million.Money —account for most of the fees and activity. USDT and DeFi projects make up the rest.
My take: This is not the kind of growth that necessarily leads to a natural appreciation in price. If anything, this extra activity just raises the costs of using Ethereum. Developers anticipate ETH 2.0 will fix a lot of problems, but ETH 2.0 is a really complicated project that keeps getting delayed.
Why we care: Ethereum is a big, important project within the tiny crypto space, but it’s a niche technology for the wider world. Smart money knows it can’t depend on ETH 2.0 saving Ethereum from high fees and bottlenecks as cryptocurrency grows. Don’t sleep on Cardano, Waves, Qtum, and other so-called “shitcoins” trying to displace Ethereum.
2. Growth In Stablecoins Is Anything But Stable (Delphi Digital)
Bottom line: MakerDAO community will probably add real-world, non-crypto assets as collateral for the only truly decentralized, permissionless stablecoin, DAI.
My take: if Maker does this, it will open a massive new way for people to access stablecoins and DeFi. Many more people have real-world assets than crypto. If DeFi can offer better rates and yields without asking people to take extra risks, more people will start posting their real-world collateral for DAI. Could be a game-changer for DeFi and cryptocurrency as a whole.
Why we care: Compound just went supernova but MKR remains a big DeFi platform and the #2 market leader, with a big developer community. Where it goes, others follow.
3. The Bitcoin Market Is Totally Dominated By A Tiny Number Of Pro Traders (Forbes)
Bottom line: professional traders account for 85% of bitcoin bought and sold.
My take: Duh. Retail traders have very small balances and almost 2/3 of bitcoins have not moved in more than a year. A tiny number of people have an outsized impact on bitcoin’s price, and by extension, the altcoin market.
Why we care: a single big move, or a few big moves, can send bitcoin’s price zooming or crashing. As altcoins generally move in the same direction as bitcoin, these traders can swing the entire market like crazy, on a whim. Fundamentally, nothing changes.
Mark Helfman is editor of Crypto is Easy and a top writer on Medium for bitcoin and investing topics. His book, Consensusland, explores the social, cultural, and business challenges of a fictional country that runs on cryptocurrency. In a past life, he worked for U.S. House Speaker Nancy Pelosi.