Cryptocurrencies

Can Ethereum (ETH) choke under the weight of ERC-20 tokens? – Cryptocurrencies

In addition to ether, its native cryptocurrency, the Ethereum blockchain has enabled the development of other cryptocurrency projects. The various applications of the latter have enabled them to meet with success on the market to the point of coming threaten ETH on its own ground. In fact, all of the ERC-20 tokens now represent nearly half of the total value of the Ethereum blockchain. A remarkable breakthrough which would be due, among other things, to the impressive results of DeFi tokens, to name but a few. The question that everyone has been asking recently is whether they will fully take control of the blockchain.


Ether only represents 51% of the value of its blockchain

A few days before the fifth anniversary of the blockchain Ethereum, the performance of the ether was naturally combed through. For now, it is almost on par with that of all ERC-20 tokens. This observation was made by Ryan SelskisCEO of Messari– through a newsletter dated July 17th.

The leader of the crypto-analysis company speaks in particular about the market capitalization of the assets present on the Ethereum blockchain. He thus points out that the market capitalization of all ERC-20 tokens has reached a total of $ 25.6 billion.

This amount represents 49% of the $ 52.6 billion that is nothing other than the total capitalization of blockchain assets Ethereum. He therefore concludes that: “Ether only represents 51% of the guaranteed value on the Ethereum blockchain, which is the smallest percentage value it has ever represented in its history. The remaining 49% of the value stored on Ethereum now spurs economic activity beyond the maintenance and execution of the Ethereum blockchain. ” The person did not fail to give the reasons for such a hold of the ERC-20 tokens.

Graph showing the weight of ether and ERC-20

The breakthrough of DeFi tokens and stablecoins

This is how Mr. Selkis tried to justify the decline in ether’s dominance over its own blockchain. He thinks that it is mainly due to the performance of DeFi (DEcentralized FInance) tokens such as Chainlink (LINK) or Crypto.com Coin (CRO). Indeed, over the year 2020, Chainlink has already recorded a spectacular jump of more than 370%, of which 80% is in the current month. It also allowed him to win ninth place in the ranking of the largest cryptocurrencies in terms of market capitalization.

Speaking of market capitalization, that of CRO has also experienced a dramatic increase. She wants currently $ 2.6 billion against just $ 426 million at the start of the year, a good of over 500%. For their part, stablecoins have grown to a market capitalization of $ 11 billion.

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Ethereum therefore seems to be a victim of the success of using its blockchain for the development of other projects. This trend could be reversed with the official launch of Ethereum 2.0 which is expected to revive its native cryptocurrency.

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