Ethereum (ETH) Dropped But Should Rise Soon

Ethereum (ETH) Dropped But Should Rise Soon

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Following Bitcoin, Ether is losing value. However, experts are confident that ETH has much more reason to soar than BTC has.

The Ethereum platform is used by over 2000 dApps today. According to founder Vitalik Buterin, Ethereum was not created for digital money. It extends distributed ledger technology to many different areas due to smart contracts. Ethereum has gained particular popularity in decentralized finance (DeFi). However, a number of technical problems of the network have not yet been resolved: scaling, high commissions. Therefore, competing projects began to appear, for example, Tron, EOS, NEO, Binance chain.

According to analysts, this affected ETH, its price began to fall. Buterin had foreseen the situation, that’s why he proposed the Ethereum 2.0 update two years ago. It will solve the scalability problem first of all. The Ethereum network is already overloaded. Transactions are getting slower and more expensive. Commissions for the year have grown 20-30 times and average over $ 3. Since May, DeFi projects have begun to grow, this has further loaded the Ethereum network. In addition, DeFi began to offer profitable conditions for their tokens holders. The number of ETH token holders dropped sharply, they were sold to buy DeFi tokens.

Ethereum tried to solve the scaling problem with second-tier solutions, sidechains, but this does not significantly change the situation. The only correct and reliable solution was recognized as updating the Ethereum blockchain by changing the consensus algorithm from Proof-of-Work to Proof-of-Stake. This will make the network scalable, fast, and cheap. But the transition will take about two years and will begin on November 4th. By this time, the test network has been running for 3 months. If no bugs are found, the existing ETH network will be included in the new network as one of the sections (shard). And the transition will happen without a hard fork. The new eWasm virtual machine will be launched, which will make smart contracts more functional and reduce fees. The updated network will be the best platform for p2p lending, insurance, and stablecoin launch. Therefore, analysts hope that the current drop in the price of ETH is just a correction before the rally, which is likely to occur on the eve of the launch of the zero-phase of Ethereum 2.0.

DeFi projects will continue to push ETH up, although many experts already see warnings about the overheating of this market and its possible crash. However, institutional investors will provide fundamental support to ETH, they will highly likely come after the network will prove that it is reliable and functional. In this case, the king of altcoins will remain on the throne.