Four years ago, during the last presidential election, the price of Ethereum was hovering at $11. Today, fast forward four years, ETH is valued at $355. Within four years, ETH recorded a 3127% increase against the U.S. dollar.
Evan Van Ness, an Ethereum researcher, said:
“Four years ago during the #PresidentialDebate, the price of Ether was $11.”
Three major catalysts catapulted Ethereum by more than 30-fold in four years. The factors are the resurgence of decentralized finance (DeFi), surging user activity, and the anticipation of ETH 2.0.
The Resurgence of DeFi
Since mid-2020, the demand for Ethereum noticeably increased at an unprecedented pace. Most of the newfound demand for ETH came from the DeFi market.
For DeFi users to transfer tokens to stake or earn a yield on DeFi protocols, they need to spend gas. The term gas refers to transaction fees on the Ethereum blockchain paid using ETH.
In the wake of the DeFi craze, gas costs surged to previously unseen levels. In some periods, average gas costs rose to 600 to 1,000 GWEI, costing users $50 to $200 per transaction.
Since users have to purchase ETH to pay for gas, naturally, that caused the demand for ETH to rise. Many users have also been staking ETH to earn governance tokens on newly-emerging DeFi protocols.
The confluence of the two factors exacerbated the recovery of ETH from the March 13 crash. Continue Reading