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3 reasons why Ethereum fundamentals are strong: ConsenSys co-founder

Ethereum has seen an increase in user activity throughout 2019.

3 reasons why Ethereum fundamentals are strong: ConsenSys co-founder

Cover art/illustration via CryptoSlate

Ethereum has seen an increase in user activity throughout 2019. Backed by the strong growth of DeFi, the ecosystem is expected to expand rapidly entering into 2020.

According to Joseph Lubin, the co-founder of ConsenSys which is considered to be the largest blockchain development software firm, the fundamentals of Ethereum are strengthening.

Optimistic numbers for Ethereum

According to Lubin, since 2019, more than 20 million Ethereum accounts were created, $650 million has been locked into DeFi, and 4.5 million ETH has been issued from block rewards.

The growth of DeFi, as reported by CryptoSlate, directly affected the rise in the user activity of Ethereum in recent months.

The ConsenSys team explained:

“The amount of ether locked in DeFi increased dramatically over the course of this past year recently surpassing $650 million. Ether has become the go-to collateral asset for defi platforms and applications.”

The overwhelming majority of DeFi users utilize ETH as the default collateral to process various financial activities across lending, derivatives, payments, and decentralized exchanges (dexes).

In the medium to long-term, efforts to scale the Ethereum network would further boost the practicality of DeFi-related services.

Number of unique Ethereum addresses continues to increase (Source: Etherscan.io)

With the increase in the number of active decentralized applications (DApps), both on-chain and off-chain infrastructure of ETH will have to improve to support the emergence of may new applications.

What will push ETH further?

Both the ecosystem and foundations surrounding Ethereum are trying to position the network to scale over the coming months to create an efficient ecosystem for developers.

ConsenSys, for instance, said in its report that it plans to bring one million developers into the Ethereum ecosystem. Various studies have indicated that developer activity is often an accurate indicator of a cryptocurrency’s price trend. The ConsenSys team said:

“ConsenSys launched its initiative to bring 1 million developers into the Ethereum ecosystem. This year a lot more effort went into analyzing developer communities. At the midway point of 2019, Electric Capital released a report showing that Ethereum’s developer community is 4x larger compared to any other crypto ecosystem.”

The main criticism towards Ethereum by developers of competing blockchain networks, however, has been the struggle of the Ethereum community to adopt scalability solutions quickly due to its size.

The Ethereum developer community being bigger than most other communities is a net positive, but can be a negative factor in implementing major solutions to scale the network.

All developers on Ethereum agree that the network has to scale to supplement its growth. Whether it can be done soon enough to in proportion to the rise of DeFi and DApps still remains uncertain.