In a world plagued by banking bailouts, galloping debt and currency devaluations, a solution is needed. Enter decentralized finance, or DeFi, the future of banking where you are the bank. Ethereum is the platform of choice for DeFi, the Dai stablecoin is hitting new highs, and Maker is moving.
Future Finance Based on Ethereum
Dai is a dollar pegged stablecoin from the Maker Decentralized Autonomous Organization. Unlike traditional stablecoins such as Tether, it is not actually backed by dollars in a vault but collateral which causes its supply to fluctuate.
Tether has massive trust issues as it can be minted at will with no proof of backing aside from their word. Dai only increases when the collateral staked on the network increases and most of that collateral is Ethereum.
As DeFi grows, the amount of Ethereum locked in the system also increases which is why a record high for Dai is also positive for ETH.
According to defipulse.com there is currently over $650 million locked in DeFi. It too is approaching its all-time high of $685 million which occurred in June this year.
There is also a record amount of Ethereum at 2.42 million, or 2.2% of the entire supply locked in DeFi. The site also reports that there is $30 million worth of Dai stored in DeFi which is almost a third of its supply now that it has reached the milestone $100 million.
Maker’s lending platform is the current market leader with almost a 53% share. MKR has been one of the best performing crypto assets this month with a gain of over 26% in just over a week.
It is likely that Maker will continue to gain as the launch of a highly anticipated multi-collateral Dai (MCD) nears. The MCD will allow more tokens to be staked as collateral in the system, it also includes Dai Savings Rate which gives the option to earn savings simply by holding Dai.
When ETH Moon?
The DeFi charts are all clearly bullish yet Ethereum still slumbers. If 2017 was the year crypto boomed, 2019 is the year DeFi hits the scene. Since gains are more sedate, but far superior to anything a bank can offer, the growth is likely to be slow and steady rather than one huge speculation bubble.
Ethereum has a lot of technical hurdles ahead for the network as it migrates to proof of stake. In addition to DeFi, this will provide another way to earn passive income by staking 32 ETH.
Bitcoin maybe a store of wealth but Ethereum is shaping up to be the future of finance, so lending platforms such as Maker with the Dai stablecoin are expected to see a lot of steady growth as monetary systems evolve.
New generations of investors will not be too confident with banks given their track record. So a decentralized solution with people in full control of their own finances is exactly what is needed.
‘Ethereum killer’ community helping new use cases’ exploration: Ash Egan
Ash Egan, a Partner at venture capital firm Accomplice, recently featured on an edition of the ‘On The Brink with Castle Island’ podcast to discuss his view of the current crypto-asset investment landscape. In doing so, Egan highlighted ongoing innovations within the “Ethereum killer” community and how it “expands the sandbox” that allows exploration of new use cases for the crypto-ecosystem. He said,
“We are not going to invest in four Layer 1’s that have very similar approach.”
Moreover, the entrepreneur stated that while corporations such as Facebook and other non-financial organizations have taken charge of crypto-innovation, “the hope is that anyone can participate in crypto-networks.” With respect to mass adoption, Egan claimed that users need to be monetized, stressing on steps such as advertisements and referrals. As a result, in the liquidity layer, there is a higher possibility of developments around having a native asset tied to in-house tokens for providing more dividends or governance rights.
Towards the technical end of the conversation, Egan highlighted the use of smart contract wallets and their most efficient interest rates. In this regard, he claimed that similar technologies are being developed which may result in fewer use-cases making sense for each ecosystems.
Additionally, Egan stated that the general public has a different perception of cryptocurrency’s true definition. For a broader understanding of the ecosystem, he reiterated that “crypto-networks are democratizing access to digital and financial systems.”
Ethereum’s breach of descending broadening wedge could push it down to $166
With the Istanbul hardfork scheduled to happen in 17 days, the Ethereum community is keeping its eye on the blockchain’s native cryptocurrency, ETH. Valued at around $174 at the time of writing, Ether had a market cap of more than $19 billion, with almost $8.2 billion worth of ETH traded in the last 24 hours, according to CoinMarketCap. EXX exchange handled the most amount of ETH volume traded over the period, which accounted for 3.53% of the coin’s daily volume.
Ethereum 1-hour chart
Source: ETH/USD on TradingView
The 1-hour chart highlighted that ETH had entered a descending broadening wedge towards the start of last week, with the price shuttling between the two trend lines since. The formation of a descending broadening wedge usually does not create any specific trend with regards to volume. However, the volume is said to spike as the price approaches the trend lines for a breakout.
The 50MA could be seen dipping down below the price line, indicating bearish pressure on ETH for the short-term. Further, MACD, with the signal line having recently regained its place over the MACD line, also highlighted short-term downward movement in price.
With the EMA Ribbon lines diverging over the price in response to the mean reversion that took place a day before, it is quite likely that ETH will continue moving down the pattern for the next week or so. With the price currently preparing to test the lower trend line, a spike in volume could indicate a downward breakout in the short-term.
Assuming a downward breakout happens in the next few days, ETH could drop down to values near $166. However, this kind of pattern exhibits upward-facing breakouts in 72% of cases, suggesting that ETH will likely bounce off the lower trend line, continue through the pattern, before an eventual breakout upwards to above $190 in the coming weeks.
Ethereum price analysis: ETH/USD extends the decline below $180.00
- ETH bears engineered a strong sell-off below the critical support area.
- The downside momentum remains strong at this stage.
Ethereum, now the second-largest digital asset with the current market value of $19.3 billion, has recovered from the recent low of $174.62, though it is still 3.5% lower from this time on Monday. At the time of writing, ETH/USD is changing hands at $176.57.
Ethereum’s technical picture
On the daily charts, ETH/USD has moved below SMA50 (Simple Moving Average) at $180.90 and smashed psychological $180.00 and attempted a breakthrough below the lower line of the daily Bollinger Band at $177.23. The bulls lost the initiative and now the risks are skewed to the downside. If $174.00 gives way, the sell-off may be extended towards $160.00, which is the lower boundary of the recent long-term range.
On the upside, keep an eye on the above-said resistance area created by SMA50 daily. It is followed by SMA100 daily on approach to $181.00. We will need to see a sustainable move above this handle for the upside to gain traction.
ETH/USD, the daily chart
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