Imagine being trolled and being almost unable to stop it. The only available means for you are to either arm yourself for the incoming impact or improve on yourself and get stronger. Ethereum is in that same spot right now. The biggest brother, who was once tall, is now being bullied by his brothers. 2021 was an interesting year for Ethereum and other major altcoins, with several of them setting a new record all-time high. Also, the DeFi ecosystem under the Ethereum network umbrella is now one of the most lucrative in the entire crypto space, with various investors looking into possible 2022 investments. 2022 in the crypto space would see several upgrades as most projects plan on improving and upgrading their networks to become better compared to their substitute. There are more than five projects described as the Ethereum killers because of the growth and advancements in the networks. They have the capacity to overthrow Ethereum as the father of DeFi. The question now is, would this be possible?
This year will certainly have its ups and downs, like every other year, but it’s important to note that some important trends will still occur. However, can Ethereum scale through these hurdles? Is this the right time to buy Ethereum or invest in its network?
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Three trends that would make Ethereum thrive in 2022
Several activities would be coming into the crypto space this year, and some of them would be hitting the Ethereum network in particular. However, here are some of the trends that could sustain the position of Ethereum as the second-largest cryptocurrency in 2022.
Decentralized finance (DeFi)
DeFi has proven to be one of the strongest arms of cryptocurrency, with an appreciable market cap compared to other ecosystems. Since the development of DeFi, it has been on the Ethereum network, with Ethereum dominating about 80% of the entire DeFi ecosystem. Because of its usage and lucrativeness, it’s becoming rapidly mainstream, with several projects looking into the decentralized finance community alongside several other crypto enthusiasts. DeFi is set to enjoy some major upgrades this year, such as the identity management components, and recall that Ethereum holds the Lion share. So, whatever happens to DeFi, whatsoever development or adoption DeFi enjoys would mean a fraction going to the Ethereum network. So as DeFi becomes more mainstream, so does Ethereum. The DeFi “know your customer” upgrade is also one of the positive news that could grow the Ethereum adoption rate and keep the network growing.
Decentralized Autonomous Organizations (DAOs)
DAOs are an integral part of the Ethereum network, and they are responsible for forecasting and organizing how companies, communities, and missions merge into a single body. They have been around for over a decade, but they seem to be undercover. However, with the issue of crypto regulation coming into the crypto mainstream, they might be becoming moiré relevant in building new entities from the previous ones, forming stronger alliances. With DAOs’ activities becoming more pronounced in the Ethereum network, they would help develop governance as investors become more financially comfortable with staking and other DEXs activities. If all these can be achieved this year, Ethereum is certainly seeing a huge user adoption, even better than the previous year.
Full transition into the Proof-of-stake consensus
This is about the main blow Ethereum will throw at all Ethereum killers this year. It’s going to be one reason why Ethereum’s price would move up, and several investors move into its network. Ethereum runs on a PoW (Proof-of-work) consensus, similar to bitcoin. However, the number of transactions carried out daily on the Ethereum blockchain is more than the consensus could process. That’s why the reason why Ethereum network suffers the issue of scalability and network congestion. Since the network is congested, validators have to impose high gas fees to prioritize transactions. However, the PoS is a more advanced consensus that has the capacity to run several transactions per sec, and Ethereum is working on transitioning into this consensus. Once this is achieved, Ethereum will live to its standard as the bitcoin killer. As it stands, Ethereum is more of a threat until the completion of the transitioning.
This year, Ethereum’s growth will depend on several factors, but these trends mentioned above would be some of the main determinants of its growth. Being second-generation crypto, Ethereum has lots of upgrades to put in place to stay clear of Cardano and Solana, amongst other Ethereum killers. Cardano is a third-generation cryptocurrency while Solana is a fourth-generation cryptocurrency, and they both have appreciable user adoption and total market cap.