Ethereum is by far the largest cryptocurrency behind Bitcoin. The asset has a market capitalization of $46 billion, which makes it around the size of a medium-cap company in the S&P 500.
Although impressive, analysts say that Ethereum could rally exponentially higher, likely towards its previous all-time highs, once it gains two more value accrual mechanisms.
The first value accrual mechanism, which is ETH acting as a store of value, is arguably already in place as millions of coins have been locked as collateral in DeFi contracts.
The two other value accrual mechanisms, Ethereum Improvement Proposal 1559 (EIP-1559) and ETH 2.0 staking, have yet to arrive.ETH's 3 value accrual pillars: – Trustless SoV ✅– EIP-1559 (fee burning) ⏲️– Staking ⏲️ Which leads to: – Trustless economy (DeFi)– Deflationary ETH– In-protocol ETH yield We've only got 1 out of 3 currently but ETH has a market cap of $46bil. Imagine when ETH has 3/3. — Anthony Sassano | sassal.eth ⛽ 🏴 (@sassal0x) October 24, 2020 The importance of EIP-1559
The first value accrual pillar on the chopping block is EIP-1559.
EIP-1559 is a technical improvement that suggests that the current transaction model of the blockchain is currently “inefficient and needlessly costly to users.”
To solve the inefficiencies caused by this system, the authors of EIP-1559 propose a flat rate for all Ethereum transactions:“The purpose of EIP 1559, according to Eric Conner, is to provide wallets and users a much needed improvement to the user-experience of gas management. The way that EIP 1559 solves the gas-management problem also improves Ethereum’s monetary management system.”
EIP-1559 also has the crucial ability to burn a small amount of ETH after every transaction is sent. That’s to say, the more transactions are sent, the more ETH is destroyed forever.
Estimates suggest that if the upgrade as implemented over the past year, nearly one million Ethereum, v...