The second largest cryptocurrency network by market cap, Ethereum (ETH), had an eventful 2020 like many other Cryptoverse players. But what awaits the network in 2021? The image looks green on price and busy when it comes to new developments, according to industry experts who they spoke with ForexNews.online.com.
ETH surged more than 400% last year, surpassing the USD 700 level for the first time since 2018. Not only was it a beneficial year price-wise, but the network also saw several test networks, some of which had more success than others. on its way to the much-promised Ethereum 2.0 (ETH 2.0), culminating in the launch of the deposit contract, followed by the first phase of ETH 2.0, Phase 0, in December.
As 2021 is here, what will it bring?
2021 will definitely see a bull market, according to Matthew Gould, founder and CEO of Unstoppable Domains. "We could see ETH prices of over $ 3,000 a lot sooner than people think." Ethereum will lead this year in use cases without storage of value, he said, adding: “Daily users of Ethereum are expected to grow the fastest of any blockchain, including Bitcoin (BTC), with all the new DeFi applications that brings to the table".
At the same time, the network will continue to move towards its second version.
"ETH 2.0 will continue to advance its roadmap, with the introduction of chunk chains, and will eventually lead to ditching the proof-of-work consensus algorithm entirely and merging the Ethereum 1 chain with Ethereum 2.0," said Monica Singer, Lead South African company from major Ethereum and blockchain Consensys. This, he argued, will result in increased performance and flexibility, as well as a new network economy through staking, further leading to higher adoption.
"Then the virtuous cycle will apply," Singer continued.
With more applications deployed on Ethereum, more developers will join the community, and the price of ETH will increase and will not necessarily correlate with the increase in the price of bitcoin, he said.
As reported, Ethereum already has more developers than Bitcoin.
Philippe Bekhazi, CEO of the stablecoin platform Stablehouse, he also noted that 2021 will likely see “a continuation of a bull market” for both ETH and BTC.
With the crypto user experience gap "soon to be resolved," as well as the scale of Ethereum, institutional interest in bitcoin, and growing interest in DeFi, 2021 will see cryptocurrencies begin to become truly mainstream, argued Jack O 'Holleran, CEO and Co-Founder of SKALE.
As a result, the number of developers building on Ethereum will grow 5 times "while chasing these new consumers." The Ethereum ecosystem is "emerging as the backbone on which Web3 is built and will pave the way for new business models that pave the way for the decentralized economy."
– omar shibli (@omarshibli) December 29, 2020
In the meantime, ETH 2.0 will help, O'Holleran said, “but on its own it won't be enough and scalability will remain critical as many dapps (decentralized applications) seek to use Ethereum as the backbone while maintaining scaling solutions that buffer them. of the exponential demands (vs. linear) the growth will be put in the network ”.
Ethereum has performed "very well relative to bitcoin and gained further momentum to the upside against the dollar," particularly during the later stages of 2020, said Rachid Ajaja, CEO and founder of AllianceBlock. "This trend is likely to continue throughout 2021 as ethereum is the entry token to all other available projects, including DeFi." Additionally, Ethereum now has a proven use case as a smart contract platform with the new popularity of DeFi and the proliferation of stablecoins like DAI, said Jonathan Zerah, marketing director for the private messaging app. Status.IM.
Ethereum is therefore tied to both its current success as the DeFi platform of choice and the adoption of Ethereum 2.0, said David Moss, Founder and CEO of StrongBlock.
"We won't start to see the fruits of Ethereum 2.0 until the end of 2021, so the big question for Ethereum 1.0 is whether it will give in under the weight of all DeFi projects."
“With the COVID-19 pandemic, the artificially high stock market, the new US administration, as well as the new all-time highs for BTC, and Ethereum 1.0 struggling under the weight of DeFi growth, 2021 will be a year transition, "he said. "I am optimistic: I think we have seen the darkness and soon we will see the dawn again."
"And of course Ethereum has EIP-1559, and the race to see if it is implemented in 1.0 or 2.0 first, or never," Moss added. This much-discussed protocol update to Ethereum is expected to roll out this year. It will reform the inflation and fee model for miners, Monica Singer said, "which may also influence the price of ETH as its supply decreases."
Smart contracts, layer 2 and competition
According to Jack O'Holleran, 2021 will be "the year of refinement, with a focus on increasing the use and complexity of smart contracts." The number of use cases for smart contracts will grow tenfold, he said, and "we will see them permeate almost every business category, making 2021 the year of the smart contract." Monica Singer also argued that the compilation capability coupled with the smart contract functionality will allow those who build products in this space to "create new and innovative products that have never been created before."
But Jonathan Zerah said he would keep an eye out for smart contract platforms with active developer communities like Polkadot and Binance.
"It's no secret that Ethereum and its developer community are still dominant, but I think there will be more resources this year dedicated to supporting more developer groups."
And while it's hard to say whether, for example, Binance's efforts will be successful, Zerah said, "it's clear that the smart contracts space is gradually moving towards improving technology."
Additionally, Layer 2 (L2) solutions will likely begin rollout in 2021 "which should allow for practical utility of the technology like never seen before," Zerah said. Layer 1 refers to the Ethereum blockchain, while Layer 2 is any protocol built on top of Ethereum. The Ethereum network is encouraging users to move the execution of most off-chain smart contracts to L2, while only occasionally running on the mainnet, added Mance Harmon, CEO of Hedera Hashgraph. "This is a trend that will continue and dominate the industry through 2021 as business adoption accelerates." As the mainnet can no longer facilitate the volume needed for enterprise-level business transactions, the migration to L2 solutions “will be the next progressive step in the space (distributed ledger technology) as they can better manage privacy and normative demands of the clients ”.
Another first will be the release of certain popular DEFI applications on L2-scale solutions, such as continuation packs, said Lucas Huang, Head of Growth at Tokenlon, adding that Synthetix, Aave, Uniswap and others have announced their L2 launch planned for 2021 already. "However, it is not entirely clear which ones will dominate, as all Layers 2 make different trade-offs and may not yet be completely satisfactory from a user perspective." However, the actual adoption of applications built on chains other than Ethereum "will probably have to wait until after 2021," Huang said.
Meanwhile, current Ethereum troubles may lead users to other chains.
Dave Hodgson, Chief Investment Officer, NEM Group, named Cosmos (ATOM), Cardano (ADA) and Polkadot among the 2021 key players that “should support multiple use cases, facilitating migration from Ethereum, while supporting similar types of contracts that can be beneficial if Ethereum faces similar scalability and cost challenges. "
"Ethereum is a project to watch, he argued, but it appears to be suffering from project fatigue with a growing number of people talking to other chains due to the uncertainty in ETH 2.0 dates and timescales."
Nonetheless, once those issues are addressed, Ethereum "will undoubtedly continue to see adoption outside of the DeFi spikes that we've seen in Q3 2020," Hodgson said.
Anthony Lauriola, Chief Operating Officer of the Blockchain Portfolio Company Dan Holdings , Mentioned Oracle solutions such as Chainlink (LINK) or Band as interesting projects to consider. "I think this year we will probably see projects like Polkadot progress as they emerge to the status of competitors against the Ethereum network," he said. Another trend that he thinks we will see emerge is the development in cross-chain adoption and multi-chain support.
In addition to layer 2 and cross-chain solutions that address current scalability issues, the user experience and user interface of dapps and wallets will also be improved, said Erick Pinos, Americas ecosystem leader at Ontology, while newer focus areas such as decentralized identity are likely to see most of their development geared towards financial data for use in DeFi applications.