What will happen with Ethereum in 2023? Ethereum bounced back after several bear markets and is likely to do so when the current one comes to an end. Considering its previous highs, investors cannot stop wondering if its price will reach $15.000. Crypto investors think it might in the following 5-10 years, depending on how the market evolves.
2022 was a tough year for all digital assets, and Ethereum price dropped together with all the other cryptocurrencies. However, Ethereum enthusiasts hope digital assets’ performance will improve in 2023, considering the tremendous opportunities the largest altcoin by market cap could bring. Vitalik Buterin discussed them in a recent blog to help investors design effective strategies.
– Ethereum-powered website logins. The network integrates technical developments that enable the blockchain to compete for login powers with centralised monopolies like Twitter, Google, or Facebook and increase its market dominance among internet-based applications.
– Inflation-repellent stablecoins. Ethereum supports the creation of stablecoins that can thwart all kinds of conditions (like hyperinflation) which affect global markets.
– Mass wallet adoption. The crypto market is witness to the development of wallets easily-accessible for all kinds of crypto investors and capable of hosting billions of accounts.
Buterin stated that the market deals with a series of issues that can be solved, and developers are highly motivated to do it. He highlighted that roll-up technology is making progress in solving scalability, and more transactions are completed on the chain than they were a couple of years ago.
Suppose you’re enthusiastic about the idea of investing in Ethereum; here is Buterin’s wish list for Ethereum in the following list. And considering he developed the network, he has the necessary motivation to see the following improvements coming to life.
Smart contract platforms
As with all the other digital assets, Layer-1 smart contracts also underperformed in 2022 because most investors sold what they could to save part of their investments as the industry went down. Factors like Bitcoin miner bankruptcies, the FTX fraud, and the solvency problems at Genesis DCG made investors adjust their strategies to limit the adverse effects on their portfolios. However, despite all the negative news, several Layer-1 platforms maintained their resilience in the market. Ethereum and Internet computers were among the leading smart contract platforms in the last few months and registered positive price action. ICP, for example, registered an increase in the pace of smart contract development.
The launch of the asset bridge that connects the Internet computer and Ethereum networks acted as a catalyst in triggering their positive performance. However, we should note that even if the two platforms registered a positive price performance, they didn’t experience any increase in volume.
Ethereum has maintained its status as the dominant L1 smart contract platform, and its network usage remained sturdy during the bear market. The network registered an increase of 4.5% of unique daily ERC-20 users that sent tokens in December 2022 compared to November 2022. L2 settlement activity on the network also spiked towards the end of 2022.
According to statistics Solana and Algorand had the worst performances in Layer 1 protocols. Algorand’s daily transactions decreased by 25% from November to December, even if it was named FIFA’s official blockchain partner.
Solana also underperformed in 2022 due to a drop in usership network activity. The FTX bankruptcy also impacted its performance and caused a drop of 14.3% in daily active users from November to December.
Ethereum Layer 2 seem to exist in a league of its own as the scaling solution Optimism registered a 20x rise in daily active users in December compared to the start of 2022. Arbitrum’s number of users also peaked at the end of the year, having 10x more active users than it had in January 2022. Optimism’s DeFi system has over $615 million, while Polygon has $1.16, and Arbitrum is around $1.11.
Lower transaction costs
THORChain’s Rune fell only 4% in the MVIS DeFi Leaders Index, outperforming its competitors. THORChain is a Layer-1 decentralised exchange housed on the SDK cosmos that allows Ethereum traders to sell ETH from an Ethereum wallet and get AVAX in an Avalanche wallet. The transaction allows ETH holders to avoid the hassle and fees associated with swapping digital assets. Experts compare the transactions with trading NYSE Coca-Cola with CME soybean features without sending money between exchanges. THORChain functions similarly to other decentralised exchanges that allow holders to lock liquidity in particular liquidity pools and then use them to swap between various cryptocurrencies. What differentiates it from the other DEXes is that it coordinates the trading across multiple blockchains to enable the traders to hold native assets instead of wrapped assets.
Rune’s volatility during the end of 2022 results from the Savers Vaults launch in November, an innovative method to transfer single-asset liquidity on the DEX. Investors can use Savers Vault for Layer 1 assets supported on THORChain, like AVAX, ETH, BTC, LTC, DOGE, BNB, ATOM, and BCH.
Metaverse
The bear market didn’t seem to affect the NFT sector, so several assets performed beautifully and even registered an uptick in volume in December 2022. The total trading across all networks spiked by 25% in December 2022 compared to the previous month. Polygon stood apart from the NFT-supporting blockchains by selling the Trump Digital Trading Card collection for 45k NFTs in less than 24 hours, accounting for 60% of the total NFT volume on the blockchain in December. Solana’s NFT community is also one of the most prominent in the sector, thanks to y00ts announcing that they’d bridge the project to Polygon. It’s a historical event because a project of this scale has never bridged over blockchains before successfully. The bridging of the y00ts project makes other NFT projects contemplate the idea of switching networks if they believe a new one would work better in their interest.
2022’s drop isn’t a reflection of the crypto market’s potential. It followed the same path as other sectors, downward, but investors shouldn’t lose hope because the current performance isn’t a reflection of the industry’s overall potential.
