Ethher (Eth), the native cryptocurrency of Ethereum Network, has not experienced its best moment.
This is a sample The total amount of ERC-20 tokens in Ethereum is higher than the ETH market capitalization.
As explained in the Cryptootic Educational section, which is Cryptopedia, these tokens are digital assets built on the Ethereum Network using the ERC-20 standard that defines the rules for their creation and operation.
According to Ultra Sound Explorer data, the market capitalization of the Ethereum Network exceeds $500,000 million, of which $237,110 million belongs to ETH. $262,850 million to ERC-20 tokens. The remaining 2.5% corresponds to inappropriate tokens (NFTs).
The main ERC-20 token that controls most of the valuation is the 143,000 million tether company’s silly, ridiculous USDT. $89,000 million BNB. The USDC, a stable circle currency, is $580 million.
But what does it mean that the capitalization of these tokens is greater than the capitalization of ETH? This means that Ethereum is a robust and adopted network with distributed finance projects (DEFI) and Stablecoins, which highlight its utility and relevance.
However, the gap between the market capitalization of the ERC-20 token and the ETH He doubts whether Ethereum’s major networks capture the value generated by its applications.
In other words, Ethereum continues to be the basis of the ecosystem, but diversification of the value of Layer 2 (L2) and token ERC-20 reduces purchasing pressure on ETH and affects market prices.
At the time of publication of this memo, the price of the ETH is $1,951. 60% below the maximum history (ATH).
The decrease in ETH contribution is also explained. This has enabled the activation of Dencun to improve the organization of Ethereum’s L1 data, allowing second-tier networks (such as polygons, optimism, arbitrum) to reduce transaction costs when interacting with the main network.
This reduces the need to directly use ETH to pay fees, reducing its demand and affects market capitalization.
Furthermore, as Cryptonoticia has already reported, Cryptocurrency markets suffer from the effects of commercial wars Donald Trump unleashed after applying taxes to products from Mexico, Canada and China.
The measure was sometimes postponed until April, but it wasn’t enough to leave the ghosts of the US economic recession. In times of political tensions and economic uncertainty, investors usually flee from risky assets such as Bitcoin (BTC) and cryptocurrency.
In the case of Ethereum, it must also be mentioned that beyond the macroeconomic context, that we are experiencing tensions within our community due to the decisions that the Ethereum Foundation is making.
Many disappointments in the community are due to the fact that they have been repeated. Ether sales to obtain funds to cover operating expenses. For this reason, members were requesting changes to the foundation’s executive direction.
Additionally, recent date changes to the SICKING update may have negatively affected ETH prices.
For Galaxy Cryptocurrency Market analyst Christine Kim, the only path Ethereum has is that “new users of the chain who purchase assets called ETH and carry commissions and revenues to L1 in L2 will take away the stagnant network.” He further states:
“Climbing through L2 spreads activity across over 50 protocols, making it difficult to understand ETH prices. In contrast, Solana was a more focused activity that had an immediate impact on prices, although it may be necessary to adopt the L2 framework in the future.”
Christine Kim, Galaxy Cryptocurrency Market analyst.
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