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Ether

Is The Growth Of ETH Driven By Stablecoins?

  • ETH has been experiencing some stagnated growth ever since the crypto market crashed on Black Thursday in March this year. 
  • ETH 2.0 is well on the way and around the corner and the price of the assets is seemingly moving sideways at the time of writing.

The second biggest Cryptocurrency in the industry, ETH has been experiencing some stagnated growth ever since the crypto market crashed on Black Thursday in March this year. Even though it has made somewhat of a recovery, ETH 2.0 is well on the way and around the corner and the price of the assets is seemingly moving sideways at the time of writing. The community has given their predictions as to why this is but in the meantime, the researcher Joel Monegro highlighted the fat protocol thesis for the cryptocurrency. 

For those that don’t know, the fat protocol thesis makes the argument that in the Internet technology stack, protocols create a massive amount of value. But for the blockchain, these protocols don’t only create value but also take advantage of most of it. According to a part of Joel‘s blog in regards to this protocol, he says:

“The market cap of the protocol always grows faster than the combined value of the applications built on top, since the success of the application layer drives further speculation at the protocol layer.”

Looking at the number of active addresses, stable coins grew from 10% of total active ETH addresses to 40%. Is it a big indicator that stable coins are driving the price of ETH as well as its growth. But since the protocol here has not been noticing any change, the whole theory is questionable. Yes, ETH has been going through a stagnated period as of late but due to the sector being in its later stages of a ‘bust’ and value transaction taking place on stable coins, this could be the reason.

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