Breaking $300: Now +70% of ETH Holders Are in The Green
Also, Coinbase launches Dai Rewards, YFI copycat blacklisted from Balancer.
|Jul 29, 2020||4|
Hello Defiers! Here’s what’s happening in decentralized finance,
Most ETH holders are making money after rally
Balancer Labs blaclisted YFII tokens from user interface
Coinbase launches Dai rewards
and more: )
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On-Chain Markets Update by IntoTheBlock
There Are Now More ETH Addresses Making Money Than Total Addresses Holding BTC
A lot has happened in the Ethereum blockchain since the last time ETH was above $300. Boosted by demand for DeFi protocols and their tokens, Ethereum’s network use has increased, causing gas prices to rise. While for a few weeks people were starting to doubt if the growth in DeFi tokens will accrue to ETH, this debate may be settled following ETH’s recent 30% appreciation.
Through all the developments that have happened in the last twelve months — from a pandemic to a Cambrian explosion in yield farming initiatives — the Ethereum blockchain has managed to accelerate its growth and usage. Leveraging IntoTheBlock indicators we can dive deeper into key metrics assessing the current state of the Ethereum blockchain versus a year ago. Spoiler alert: Ethereum’s network is in a much stronger position.
1. Number of ETH Addresses Profiting Double than a Year Ago
ETH holders took advantage of the opportunity to buy under $300.
IntoTheBlock’s Historical In/Out of the Money (HIOM) indicator analyzes investors’ on-chain positions based on addresses’ average cost for a token, in this case ETH. Based on this, the HIOM calculates the percentage and the total number of addresses that are “in the money”, or profiting on their positions on paper. By comparing variations in the HIOM over time, we can determine buying/selling activity based on the number of addresses profiting at a specific price level.
The last time ETH prices were above $300, 13.5 million addresses (less than 50% of all holders) were in the money. Comparing these numbers to the ones observed as ETH surpassed the $300 barrier a few days ago,we see that the number of ETH holders profiting at a price of $310 has more than doubled.
This massive increase signals that millions of new addresses bought ETH below $300. Additionally, since the growth in addresses profiting is greater than the increase in the total number of ETH addresses with a balance, we can establish that approximately 1 million previous ETH holders opted to bring their average cost down.
At the time of writing, 73.24% Ether addresses are making money in their position (on paper at least) at a price of $321. This means that the number of Ether addresses profiting (31.86 million) has now surpassed the total number of Bitcoin addresses with a balance (30.83 million). In other words, more addresses are making money in Ethereum than the total number of addresses holding Bitcoin.
2. ETH Transactions Reach Highest Level Since January 2018
Following the increased growth in dapps built on top of Ethereum, the number of daily transactions on the Ethereum blockchain is now within reach of its all-time high of 1.34 million.
As can be seen in the graph above, the number of transactions has been on a consistent uptrend throughout 2020, despite slowing down in the second half of 2019. While the price of ETH is still lower than the high reached in the summer of 2019, the peak in the number of daily transactions is approximately 25% higher now than what we saw last year.
This growth in transactions highlights the increased demand to use the Ethereum blockchain, pointing to ETH’s utility value as infrastructure for a decentralized economy being significantly stronger than a year ago.
3. Number of ETH ‘Hodlers’ Up 80%
While the number of transactions occurring in the Ethereum blockchain has outpaced the demand to use Bitcoin’s blockchain, most would argue that Bitcoin is priced at a premium vs Ether because many see it as a store of value.
Despite being difficult to determine the specific metrics to classify whether an asset is a store of value or not, a key characteristic of stores of value is that people believe they will retain their worth. In Bitcoin, the trend to ‘hodl’ propagates store of value properties as long-term investing removes short-term downward price pressures from trading instead.
At IntoTheBlock, we classify an address with a holding time of over one year as a hodler. As can be seen in the graph below the number of ETH hodlers has increased by over 10 million within the last twelve months.
Overall, these on-chain metrics suggest that Ethereum is currently undervalued, at least in relation to its valuation a year ago. As new addresses have taken the opportunity to buy ETH below $300, existing holders have opted to hodl and in many cases lower their average costs. Finally, Ethereum’s outstanding transactions growth evidence the high demand to use ETH and the thriving DeFi ecosystem built on top of it.
Blacklisted YFI Copycat Spurs DeFi Soul Searching
Censorship is the talk of DeFi this morning as automated asset management protocol Balancer blacklisted YFII, the fork of yEarn’s governance token YFI.
YFII has been the recipient of vast community contention, with critics citing unaudited smart contracts, centralized control and safety risks as reasons why yield farmers should avoid the project.
But YFII continues to move forward, recently burning their owner key to mitigate the risk of infinite inflation. While the project appeared to be making strides towards safety, key DeFi players Balancer and MetaMask saw otherwise.
This morning, Balancer blacklisted $20M worth of YFII pools on their UI in an attempt to protect its users. The move spurred some backlash as community members said Balancer should have used its BAL-based governance system to make the decision, while others took the opposite side saying Balancer has the right to decide what projects are listed in its interface.
YFII responded by forking Balancer, only to be met with a blatant scam warning by MetaMask.
YFII’s forked Balancer pool is still live, and Balancer has since relisted the original pool on their front end to allow LPs to remove liquidity.
If nothing else, this case of “is it a scam is it not” won’t be the last one in DeFi, and raises questions about the perceived permissionless nature of key protocols and whether everything should be decentralized.
Coinbase Users Will Now Earn 2% on Dai Deposits
Coinbase is introducing Dai Rewards, with 2% APY for customers in the US, UK, Netherlands, Spain, France, and Australia. Eligible customers with at least $1 of Dai in their accounts will begin earning interest automatically. Initial rewards will be distributed within five business days, then every day and customers can use or withdraw their rewards as soon as they receive them.
“With yields on savings accounts and government bonds at record lows, earning rewards on stablecoins like Dai and USDC stands out as an alternative way to passively generate income using crypto held on Coinbase,” Coinbase wrote in a press release.”
Coinbase has been leading the charge in DeFi among centralized exchanges. Last year, it began offering stablecoin rewards for USDC deposits to US customers, and launched Coinbase Earn, where customers could earn Dai by watching educational videos about crypto and taking quizzes.
Bitcoin hardware wallet maker Ledger revealed today that its e-commerce database was hacked last month, leaking 1 million emails and some personal documents, Decrypt reported. Ledger said the attack targeted only its marketing and e-commerce database. All financial information—such as payment information, passwords, and funds—was unaffected. The breach was unrelated to Ledger's hardware wallets or its Ledger Live security product, the company added.
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About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.