Ethereum: why the best is yet to come!

As a blockchain service provider delivering blockchain solutions for enterprises, we are seeing a shift happening on the technology side, where more and more attention is given to Ethereum. As it just celebrated its 5th anniversary, we tried to gather here some figures to illustrate this point.

Developer Community

When choosing software, the primary focus should be to select an open technology that guarantees multiple vendors, an active developer community, and broad support. Today the ethereum ecosystem is reaching almost 1 million developers.

Users Community

The network effect is the same here with an increasing number of companies building on Ethereum. Surprisingly we are seeing a clear decrease in the number of LinkedIn companies mentioning Fabric or Corda as well. 

Investor Community

Last but not least, investment in Ethereum based companies keep on growing with new business models getting created, such as decentralized finance.

While the above metrics show convergence towards Ethereum, there are still some concerns. The platform is just five years old, transactions on the public chain are limited and costly, and the long-awaited upgrade to Ethereum 2.0 has been delay countless times. However, it seems that 2020 will finally see the launch of phase 0, combined with layer two solutions that will solve most of the above pain points.


So, what is driving Ethereum adoption?

Here we will review the most active sector that drives Ethereum as the platform of choice for innovation. 

Decentralized financed “DeFi”: 

What is Defi? One user on Reddit described it quite well:

  • “Bitcoin is a bank account where you are the bank. 
  • You can hold and send money, and no one can take it away from you. There is no middleman.
  • But banks do more than hold and send money, right? Lending, interest, all that sh**?
  • Yea, that’s DeFi.”

The core of DeFi is to “unbank yourself” and to not depend on a central authority. People are using DeFi to loan or borrow money without the use of a third party. The scale of adoption is impressive, with the amount locked in different DeFi protocols being now at USD 6 billion up from USD 1 billion in February 2020. The surge seems to keep on going with new products and companies jumping on the hype. The downside is that today DeFi platforms are using most of the Ethereum network leading to an increase of transaction fees.

Stable coins and Central Bank Digital Currency (CBDC):

Stablecoins are cryptocurrencies designed to minimize the effects of price volatility. They are generally backed by a fiat currency such as the dollar or the Euro, with a ratio of 1:1. People use stable coins as stores of value or to borrow and transfer money in a much easier way. Today the majority of stable coins are issued on Ethereum.

Banks around the world are noticing this trend and are starting to study the inevitable switch to digital currency. Central banks are running experimentations to understand how they will be able to issue such Central Bank Digital Currency (CBDC) while enforcing their monetary policies. 
Recently China has been quite vocal about launching its digital Yuan as soon as possible while Europe and the US are exploring the available solutions. 
For such sensitive implementation that will be the backbone of countries’ economies, the choice of an open and widely adopted technology will be mandatory.

ETH 2.0: becoming the settlement layer of enterprise applications:

The Ethereum 2.0 upgrade, which will happen in phases over several years, will enable faster transactions and scalability. Once it happens, we could potentially see Ethereum become the backbone of most of the blockchain applications.

The founder of ConsenSys and co-founder of Ethereum Joe Lubin wrote those words back in April 2019: “Why Ethereum will become the global settlement layer.: [Ethereum 2.0].. will bring more security, which will bring additional confidence from the financial institutions to use it a base blockchain…. Other networks such as Hyperledger Fabric or R3 Corda are only private and lack the features needed to develop on top of them. There is only one alternative that makes sense today for blockchain applications, and it is Ethereum.”

Enterprise solutions: finance, supply chain, real estate, payments …

In 2018 and 2019 companies started experimenting with blockchain and Ethereum with proof concept applications to understand the potential of the technology. In 2020 we are now seeing production-ready platforms bringing an actual return on investment (you can check our article on 10 blockchain ROI here).

Here as well Ethereum is appearing as the platform of choice for enterprise-grade solutions with projects being built by large companies in the banking space (Banco Santander…), supply chain (Coca Cola..), trade finance etc…Adding to that the initiative ongoing at the Ethereum Enterprise Alliance (EEA) to define the blockchain standards for enterprise, the foundations are here for the exponential growth that is coming.

As of today, all the lights seem to be turning green for Ethereum to become the reference blockchain platform and with the 2.0 upgrade being launched we can’t wait to see what the next few years are going to bring.

If you are interested in blockchain application for enterprise, please feel free to contact us at [email protected]

Thanks,

Maxime