Analysts: Defi Is the Element Behind the Massive Growth of Ethereum

Recently, Live Bitcoin News put out a story talking about how strong Ethereum has been over the past few weeks. While BTC has largely been hogging the spotlight and traders and crypto fans everywhere have been talking about how strong it’s been, Ethereum – in many ways – has outdone the jumps and price swings of bitcoin, gaining roughly 300 percent in value in just the last few months alone.

Ethereum Has Surged Like There’s No Tomorrow

Now, the currency is trading at its highest point in roughly three years, and it’s been largely believed that Ethereum – which is the second-largest cryptocurrency in the world and the biggest competitor for bitcoin – moves in tandem with its parent currency, but this isn’t quite the case as of late. If Ethereum can overpower BTC the way that it has, something else is likely driving its power.

Many analysts believe that the vast growth of the decentralized finance (Defi) arena is what’s pushing Ethereum forward. The big clincher behind Defi as of late is that it can somehow revamp traditional financial tools, such as insurance and loans, to somehow be safer and more accessible to all. At press time, one unit of Ethereum is trading for well over $1,400, having beaten its previous all-time high set in the year 2018.

Brian Norton – chief operations officer of My Ether Wallet – explained in a recent interview:

2020 saw the explosion of the Defi ecosystem on Ethereum – first hitting $1 billion in total value locked in February, now $20.5 billion in only 11 months. This growth has attracted many new users seeking yields that are not available on bitcoin with centralized intermediaries.

He further commented that many people have been piling money, time and energy into the Ethereum network ever since the launch of Ethereum 2.0, which is set to make the blockchain more scalable and more effective in terms of payments, transactions and the creation of future coins and applications. This has caused the Defi space to surge the way it has. He states:

What I am watching is developer activity on Ethereum, as it serves as an indicator that new and better use cases are coming which will increase demand for the native asset. Ethereum has over five-fold the number of active developers as bitcoin and is adding developers at a faster clip every day.

Defi Is a Big Contributor

According to Paolo Ardoino – chief technology officer of Bitfinex – the Defi space has caused a few headaches for the ETH community, but in the long run, it’s likely to bring a whole new level of strength to the ETH network and allow it to support the growing demands people have been putting on it. He mentions:

While the explosion of projects in Defi has caused growing pains for Ethereum, layering solutions are in the works that are helping the network to scale.

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