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The Ethereum Token Ecosystem Is Thriving

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The Ethereum Token Ecosystem Is Thriving

The so-called Ethereum killers never arrived. The network thrives as ERC-20 tokens approach Ethereum’s capitalization. Other smart contract platforms are not even close to Ethereum in terms of relative activity.

Coin Metrics employed an analysis developed by Chris Burniske of Placeholder, a New York-based venture capital partnership, to measure the health of the Ethereum network. The metric compares the market capitalization of Ether to that of all the tokens launched on the network. This network value to the token value ratio evaluates the health of Ethereum’s token ecosystem.

A value of one indicates that Ether’s market cap and the aggregated market capitalization of the tokens it hosts are equivalent. That implies a healthy, possibly undervalued smart contract platform. Coin Metrics found that the ratio has declined significantly since Q2 2017 from just under 35 to 1.9.

Courtesy Coin Metrics Network Data Pro, Ethereum Network Value to Token Value

What Caused the Fall?

ERC-20 tokens blossomed during the ICO frenzy of 2017. Most of those were utility tokens that enjoyed explosive initial price growth before rapidly descending — though Ether followed a similar trajectory. ICOs generally accepted ETH or BTC in return for their tokens, placing demand pressure on the platform’s native token.

Ether went through the same crypto winter endured by the whole market — perhaps exacerbated by ICO projects selling out of Ether into fiat to fund their activities.

According to Coin Metrics, stablecoins were responsible for the majority of the growth in non-native token value since mid-2018. Their capitalization rose from $109 million to more than $2.8 billion in that year-and-a-half period — going from one to 28 percent of the entire ERC-20 ecosystem.

In contrast, utility tokens fell by almost $2 billion, from 70 to less than 50 percent of the ERC-20 market capitalization. Exchange tokens remained fairly steady, representing about a quarter of the value of ERC-20 tokens.

Meanwhile, ETH Hasn’t Fared so Well

The growing health of Ethereum-hosted tokens only paints half the picture. Since mid-2018, stablecoin growth and a dwindling ETH price have combined to lower the relative value ratio to where it currently stands. On Jul. 1, 2018, Ether’s capitalization was just under $50 billion. Now it is around $20 billion.

The ERC-20 market essentially remained stable. Its makeup swayed with the growing relative importance of stablecoins, but its total value of approximately $10 billion increased only slightly over the period.

According to Coinmarketcap, Tether remains the dominant stablecoin at a market capitalization of over $4 billion. That is ten times the market cap of the second-largest ERC-20 stablecoin, USDC.

Tether could propel an even lower network value to the token value ratio. Tether is built on a number of protocols. The most important are Omni and Ethereum. As Coin Metrics noted, “Over the last several months, usage has been shifting from the Omni-based version to the Ethereum-based version of Tether.” If that trend continues, Tether will play an increasingly significant role in the aggregate value of the tokens hosted by the Ethereum platform.

How Are the Ethereum Killers Faring?

Burniske compared the network-to-token value ratios of ETH, EOS, XLM, WAVES, and NEO.

He found that activity on the Ethereum, WAVES, and NEO platforms was quite healthy with ratios under 10. On the other hand, EOS has a ratio of more than 200 — far higher than Ethereum. Burniske suggested that at least one of the assets is priced inadequately compared to its token hosting utility:

The graph illustrates that despite its own ups and downs, the Ethereum network remains a healthy platform for token activity. Crypto investors would be wise to stay alert to this metric. At current prices, Ether could be significantly undervalued.

Altcoin News

Ethereum Fractal Suggests Altcoins Could Soon Outperform Bitcoin

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Ethereum Fractal Suggests Altcoins Could Soon Outperform Bitcoin

Throughout 2019, altcoins like Ethereum, Ripple, and others, have grossly underperformed next to Bitcoin, sans a few outliers like Chainlink, or Binance Coin, who had breakout years themselves in 2019.

But according to a very accurate-looking fractal on ETH/BTC price charts, Ethereum could soon break out against Bitcoin, helping to propel altcoins out of the gutter and back into a full-blown alt season.

ETH/BTC Trading Pair Fractal Hints at Ethereum Outperforming Bitcoin

The year of 2019 has been mostly about Bitcoin and its safe-haven narrative driving the price of the leading cryptocurrency by market cap up 350% at its high of $14,000. At its peak, the first-ever cryptocurrency was able to reclaim as much as 70% of the all-time high price is set at the height of the crypto hype bubble.

During Bitcoin’s highly-publicized meteoric rise, another crypto asset, the number two cryptocurrency by market cap, Ethereum, also reached its all-time high price of $1,400. However, throughout 2019, Ethereum was only able to regain 25% of the ground it lost during the bear market and downtrend.

But that may soon change, as according to a fractal shared by one well-known crypto analyst, the ETH/BTC trading pair price chart is exhibiting a price pattern fractal that very closely mimics a pattern that played out just before Etheruem had its first alt season, where the altcoin exploded in value against its Bitcoin ratio.

In the chart shared by the analyst, prior to the main, blue-underlined price action notated with 7 total waves, a miniature version of the price action can be seen, with the same exact peaks and troughs. In the tiny-sized version, following the sixth wave down, came a powerful, seventh wave up that sent the price of the asset skyrocketing.

ETH/BTC just completed what appears to be the sixth wave down once again, which could indicate that an extremely powerful wave seven upward is about to begin, causing Ethereum to greatly outperform Bitcoin for the foreseeable future as it makes up for ground it lost throughout the year against the first-ever cryptocurrency.

The last time this occurred, Ethereum helped drag the entire altcoin market upward, causing what most refer to as an alt season – or a period of time when altcoins trend and significantly outperform Bitcoin as a result.

Altcoins have long been oversold, reaching increasingly lower lows, and potentially signaling that a bottom is in against Bitcoin and a reversal could soon take place – all while Bitcoin continues to correct following the lonely parabolic rally it went on by itself during the second quarter of the year.

ETH/BTC is currently priced at around 0.02 on the ratio against Bitcoin, but such a move could take the ETH/BTC back to 0.16 or higher, where the trading pair peaked in early 2017

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Bitcoin News

One Billion of Ripple’s XRP Released From Escrow As BTC and ETH Whale Activity Escalates

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One Billion of Ripple’s XRP Released From Escrow As BTC and ETH Whale Activity Escalates

One billion XRP owned by Ripple has just been released from escrow, making it available for the San Francisco startup to sell to institutions and crypto exchanges.

It’s part of a monthly routine set up by Ripple in late 2017. At that time, Ripple locked 55 billion XRP into separate escrow accounts – each account containing 1 billion XRP.

Every month, 1 billion XRP is unlocked from escrow, and the amount that Ripple doesn’t sell is placed right back into escrow 30 days later.

The process is designed to assure investors that Ripple will never sell all of its holdings on the open market at once.

“To provide additional predictability to the XRP supply, Ripple has locked 55 billion XRP (55% of the total possible supply) into a series of escrows.

These escrows are on the ledger itself and the ledger mechanics, enforced by consensus, control the release of the XRP.”

With the price of XRP lagging far behind Bitcoin in 2019, Ripple has faced increasing criticism that its sales of XRP are keeping the price of the third-largest cryptocurrency from rising.

Ripple sells XRP to crypto exchanges on a daily basis, at 10 basis points of the daily XRP volume. It also conducts over-the-counter (OTC) sales to institutions looking to buy the crypto asset in large quantities. The company strongly denies the notion that its sale has any impact on the market.

Ripple says it sold $66.24 million worth of XRP in the third quarter of this year and plans to sell a similar amount in Q4.

Meanwhile, a number of Bitcoin and Ethereum whales are making a splash this weekend.

Whale watchers spotted a movement of 385,904 ETH worth $58.2 million on Saturday. The transaction was sent between two wallets of unknown origin.

Bitcoin whales sent a total of 7,642 BTC worth about $58.4 million in the last 24 hours. Three of the transactions involved crypto moving from unknown wallets onto exchanges, with the other three doing the opposite – moving BTC from crypto exchanges to unknown wallets.

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Altcoin News

bloXroute helps Akomba Labs receive blocks 50% faster

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bloXroute helps Akomba Labs receive blocks 50% faster

bloXroute Labs, creators of a blockchain scaling solution through its Blockchain Distribution Network (BDN), announced today the results of three-week-long testing done by Akomba Labs showing they can significantly improve block propagation performance.

The collaboration with Akomba Labs, technology research and advisory firm, measured the effect of using the BDN on transactions and block propagation on the Ethereum network.

The testing was organized by Virgil Griffith from the Ethereum Foundation and measured the propagation of Ethereum blocks with and without the BDN from a major mining pool in China to a node managed by Akomba in Singapore.

During testing, actual propagation data was collected from roughly 2,015 blocks mined by a leading mining pool in China to the Akomba Labs’ node located in Singapore.

The results show that, on average, the propagation time without the BDN was 360ms (1598 blocks) and with the BDN it was 172ms (1690 blocks): cutting it by more than 50% with the BDN.

“We spent the last few months focusing on improving propagation out of mainland China. With so many mining pools, exchanges, DApps, and other Ethereum users based in Asia, it was a major goal of ours us to improve the blockchain networking infrastructure in these geographies. We were pleased to be able to deliver such promising results while further testing the BDN’s robustness and new network features. It is also important to emphasize that we expect to see even more improvements with a larger gas limit and larger blocks on Ethereum as bloXroute allows Ethereum miner pools to increase the gas limit and generate larger blocks without slowing down propagation and increasing the uncle rate.”
– Eyal Markovich, COO, bloXroute Labs

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