After the creation of Bitcoin, the Ethereum white paper contained the most important insight that kickstarted the blockchain megatrend. Published in 2013, it expressed early Bitcoin adopter and programmer Vitalik Buterin’s vision that blockchain technology can have a multitude of use cases and executable smart contracts on the blockchain would facilitate the development of a wide range of applications.
The founding team raised funds for the project in 2014 via a then relatively new crowdfunding method, the Initial Coin Offering (ICO), with Ethereum being technically the sixth ICO, but the first high profile one. The network went live on 30 July 2015.
Ethereum is in the process of upgrading the protocol from proof-of-work to proof-of-stake. The new proof-of-stake chain launched in December 2020 and has been operating in parallel. The merge of the new chain with the mainnet is expected in the near future.
TECHNOLOGY
The key technological difference between Bitcoin and Ethereum is the smart contract execution capability embedded in every Ethereum node (called the Ethereum Virtual Machine) as well as various other advances such as faster block time and greater resistance to centralisation.
Initially, Ethereum also used the proof-ofwork consensus algorithm for validation (with
miners committing computational power), however, it is currently being migrated to proofof- stake (where validation is performed and the transaction fees and staking rewards accrue proportionate to the amount of tokens locked) with the launch of Ethereum 2.0.
Ethereum 2.0 is primarily aimed at improving scalability while targeting some improvements in security and centralisation resistance as well. An additional benefit of the proof-ofstake mechanism is its vastly lower energy requirement.
KEY PEOPLE
Other than Vitalik Buterin, the early contributors and founders of Ethereum included several high profile developers such as Charles Hoskinson, Gavin Wood and Jeffrey Wilcke – some of whom went on to start important blockchain projects of their own (Cardano, Polkadot) –, as well as influential crypto entrepreneurs Anthony Di Iorio and Joseph Lubin.
The Ethereum Foundation, a Swiss nonprofit organisation, conducted the original fundraising, and continues to support technology development and ecosystem growth.
Ethereum has the highest developer support of any blockchain project.
ECOSYSTEM
Ethereum’s smart contract functionality attracted developers, and thousands of applications have been built on the platform. Popular use cases have included crowdfunding (ICOs) and decentralised finance, among others. Ethereum is by far the most widely used platform for decentralised applications, and the ERC20 token standard created on Ethereum has been the mostly widely used method for creating and issuing new digital assets.
Ethereum is the leader in total value locked as collateral in decentralised finance (DeFi) applications as well as in the number of projects hosted on the protocol. Ethereum is also leading the new trend for the blockchainbased creator economy, non fungible tokens(NFTs), and fan experience/fan tokens.
Meanwhile Ethereum is used also as a store of value and a medium of exchange, and with PayPal allowing payments in Ethereum, and the CME launching Ethereum futures in February, Ethereum is the most likely beneficiary of the institutional adoption of cryptocurrencies, after Bitcoin.
SUPPLY MODEL/TOKENOMICS
Ethereum has a fixed issuance schedule without a cap on the total number of Ethereum issued.
The lack of a supply cap was intended to limit excessive wealth concentration, while it was foreseen that over time the rate of issuance will roughly converge to the rate of loss of tokens, creating an equilibrium.
Over time, the rate of issuance of Ethereum has been adjusted downward, and there have been suggestions of a possible hard cap. A proposal for revising Ethereum’s transaction fee model, expected to be implemented in July, will involve burning (destroying) the Ethereum paid as base transaction fees – this will offset some, or all, of the new issuance of tokens.
KEY VALUE DRIVERS
The great demand for using the Ethereum platform has meant that transaction costs and speed became a problem and delivering the solution to this is pivotal to the continued success of the network. Successful delivery of the remaining phases of Ethereum 2.0, and a successful migration to the new chain are critical to Ethereum maintaining its dominance as the preeminent smart contract platform.
As decentralised finance (DeFi) applications currently account for the majority of the transaction volume on Ethereum, the shortterm upside versus risk on Ethereum is also closely tied to the trends in DeFi.
Due to Ethereum’s success as a platform for blockchain applications, and a view held by some that Ethereum is “better money” than Bitcoin, there has been an expectation that Ethereum will overtake Bitcoin in terms of market capitalisation – referred to as the “flippening”.
KEY METRICS
Market Cap
USD 376 billion
Price
USD 3,150.25
All time high price
USD 4,891.70
Total issued tokens
No max. supply
Circulating supply
119 million
Liquid supply
116 million
2050 supply
135 million
Updated on 10. January 2022
Price & market capitalisation
Total transaction volume
Active addresses
Volatility
Different moving averages
RSI
About Sygnum
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