So, what’s going on this week?

DeFi is heating up again, OpenSea is getting serious competition and Ethereum's final vision will be shipped in 2025!

TLDR

• The Final Version of Ethereum is on track for 2025 Delivery
• Ethereum’s DeFi has attracted $2.3B+ recently (75% of which into six protocols only)
• Optimism (L2) Fundamentals looking worse than ever
• Blur, OpenSea’s competitor, is dropping a token on Valentine’s Day
• The charts are still bullish and indicating $2,000+ soon
• Share this report with your family and friends.

Disclaimer: This is not financial nor investment advice. You are fully and solely responsible for any capital-related decisions you make.

 

Before we get started, here is a clip of Vitalik explaining how crypto is changing the world.

Ethereum’s Roadmap

Ethereum’s roadmap is almost complete, once there (est. 2025), the chain will go into its maturity phase. Here is an overview:

• The Merge (shipped 15/09/22): The goal was to safely migrate Ethereum from Proof-of-Work to a Proof-of-Stake consensus algoritm.
• The Surge (on the way): This step increases Ethereum’s scalability, targeting 100,000 transactions per second on Layer-2s. The main upgrade allowing that to happen is called ‘proto danksharding’ (EIP-4844) which will also reduce the fees by 100x making L2s as cheap as Solana.
• The Scourge (on the way): This part of the roadmap is more technical but what you need to know is that it improves decentralisation even further. It does so by assigning the responsibilities of proposing and implementing new blocks to two separate parts of the network (i.e. fixes MEV).
• The Verge (on the way): This stage’s goal is to adopt Zero-Knowledge Proofs in the transactions verification process. That change will make TXs simpler and quicker to verify by any computer.
• The Purge (on the way): This is closely intertwined with the previous step as ZK technology can help reduce the overall size of the blockchain. Ethereum already exceeds 1TB in size and is expected to reach up to 8TB in only a few years. This makes at-home nodes practically impossible to run, leaving a centralisation risk as only large parties would be able to run nodes.
• The Splurge (on the way): Fix everything else - smaller fixes.

This roadmap is expected to be complete in 2025.

Privacy on Ethereum

One of the unaddressed problems with blockchains today is how public they are. Blockchains are anonymous but not private. This means if your address is found by someone, they have access to your entire financial history. This is a big problem for worldwide adoption.

Vitalik released a blog post last week, explaining ‘Stealth Addresses’ whereby this privacy issue is resolved. The basic idea is that stealth addresses allow for the creation of one-time use addresses for receiving funds, making it difficult for outside parties to track the movements.

This does present its own set of challenges as of today, the solution likely comes with ZK technology - in ‘The Verge’ part of the roadmap.

The State of ETH

Price Action

Charts tell us stories, here’s what this one is telling us:

Last week, despite being relatively quiet, there was a silent war between buyers and sellers but buyers ended up winning. They forced sellers to walk back any ground they conquered.

Price has also set a subtle new local high, indicating that the change in market structure from bearish to bullish is complete. This suggests that our target of $2,200 is up next.

The one condition we have to remain bullish is $1,420 holding as support.

While we believe both $2,200 and $3,475 get tapped over the coming weeks, do note that the Risk:Reward has changed and is no longer as favourable for new buys as it was a few weeks ago.

Smart Money

The number of ETH whales with 10,000+ ETH in their wallets has seen a sharp rise since November to historic highs. In the past weeks however, we’ve been seeing a sustained fall from 1,215 to 1,197 whales. The number remains low and unworrying but we must monitor this stat as a severe fall can indicate a local top.

The number of 1,000+ ETH whales has sustained at the same level since last two weeks - meaning they are holding their newly acquired ETH (positive for bulls)

Ethereum Users

In the past two weeks, the number of users has increased by +7.4% jumping up from 325,000 to 350,000.

Ethereum Ecosystem

Decentralised Finance | DeFi

Ethereum’s DeFi TVL has grown by +8.6% over the past two weeks by adding $2.3B+ to the ecosystem.

While a logical explanation would be that ETH’s price has gone up and so has the TVL given that a lot of it is denominated in ETH, this time that isn’t the case. Why? Because the price of ETH is barely up 2% in the past two weeks.

Almost 75% of that added TVL came into six protocols only (amongst thousands):

1. Curve Finance (+$570M): Decentralised exchange built for low-slippage stablecoin trading.
2. Aave (+$310M): Decentralised lending and borrowing protocol.
3. Convex Finance (+$280M): DeFi protocol helping you boost Curve yields.
4. Uniswap (+$220M): Primary and largest Ethereum DEX.
5. Compound Finance (+$210M): Decentralised lending and borrowing protocol.
6. Liquity (+$110M): Decentralised borrowing platform allowing you to take 0% interest loans on your ETH.

Layer-2s

The L2 TVL continues to rise with $740M+ added since the last update. What is most interesting in this part of Ethereum however is the sharp decrease in Optimism usage as soon as ‘Optimism Quests’ ended 👇🏼

[caption id="attachment_261405" align="aligncenter" width="2212"] OP Price & Optimism Daily Active Users | Source: TokenTerminal[/caption]

What we notice here is a severe divergence between price and active users. OP’s price continues to trend up even though the number of daily active users has severely fallen.

Euphoria is a hell of a drug and as they say: “the market can remain irrational for longer than you can remain solvent”. Nonetheless, what we do know is that prices catch up with fundamentals and unless Optimism users increase by a large margin, price will soon be following it on its path to the downside.

NFTs

The volumes and number of transactions across Ethereum NFTs hasn’t seen drastic changes since last week.

One metric stands out however: marketplace market share.

NFT MarketPlace Volumes by hildobby

Up until October 2022, the main NFT marketplace competitor has been OpenSea, having almost 100% market share. Recently however, a new one is taking a good amount of market share: Blur.

Neither Blur nor OpenSea have a token but Blur have announced the launch of theirs on Feb 14. This can lead OpenSea to finally drop theirs to avoid a vampire attack.

Token launches heavily depend on the economic model adopted. Historically though, NFT marketplace token airdrops began with a large rise and continued with a sustained downfall in price - take a look at $LOOKS below 👇🏼

 

Cryptonary’s Take | Conclusion

Based off the increasing number of users, capital and favourable charts we believe ETH is set to tackle $2,000+ soon. With that said, we must also mention that the Risk:Reward ratio for short/medium-term traders is no longer 'as' favourable if you’re looking to buy here.

The only other notable point is that OP has gotten ahead of itself and seems on the verge of falling based on poor fundamentals.

Vitalik thanks you for reading 🙏🏼