There Are Major Changes Going On for Ethereum. Will They Be Favorable for The Future Price?
2022-05-06 17:35:55
What Is The General Opinion About Investing In Ethereum In 2022?
There is no doubt that Ethereum has played a fundamental role in the construction and improvement of smart contracts opening the doors to all the DeFi applications that we know today. Its contribution to the development of blockchain technology is still at a very high level, but it has not yet managed to solve one main problem: the high cost of transaction fees. This drawback is mainly caused by the limited scalability of Ethereum blockchain. The high number of transactions performed on the multiple DeFi and NFT applications built on Ethereum have caused the increase of gas fees, which are needed to validate the transactions. This does not mean that the project was built badly, in fact, it is still considered as a masterpiece by many experts, but as a result, some people have chosen to use other similar, but much cheaper protocols.
The development team of Ethereum has been working for a long time on a solution: the transition from the Proof of Work consensus mechanism to the Proof of Stake mechanism, which will give birth to the so-called Ethereum 2.0. The PoS mechanism uses staking instead of mining to verify and include new transactions in the blockchain, which should improve scalability and hence reduce the cost of gas fees. The upcoming upgrade is creating a lot of discussion about what will be its impact on the price and whether it is worth it to buy Ethereum.
There is no doubt that Ethereum has played a fundamental role in the construction and improvement of smart contracts opening the doors to all the DeFi applications that we know today. Its contribution to the development of blockchain technology is still at a very high level, but it has not yet managed to solve one main problem: the high cost of transaction fees. This drawback is mainly caused by the limited scalability of Ethereum blockchain. The high number of transactions performed on the multiple DeFi and NFT applications built on Ethereum have caused the increase of gas fees, which are needed to validate the transactions. This does not mean that the project was built badly, in fact, it is still considered as a masterpiece by many experts, but as a result, some people have chosen to use other similar, but much cheaper protocols.
The development team of Ethereum has been working for a long time on a solution: the transition from the Proof of Work consensus mechanism to the Proof of Stake mechanism, which will give birth to the so-called Ethereum 2.0. The PoS mechanism uses staking instead of mining to verify and include new transactions in the blockchain, which should improve scalability and hence reduce the cost of gas fees. The upcoming upgrade is creating a lot of discussion about what will be its impact on the price and whether it is worth it to buy Ethereum.
How Did the Price React After the Announcement of the Future Update?
Leaving aside the moments when ETH followed BTC during upward movements, it is interesting to note that despite the latest downward trend, the price of Ethereum is holding quite well. Even more interesting is the fact that whales are continuing to accumulate Ether, even after the price dropped below $2,300. Moreover on May the 3rd, the ETH balance on all crypto exchanges fell to its lowest level since August 2018 (a research by Glassnode). Generally, this means that people do not intend to sell their Ether in the short term. Last but not least, data shows that the number of ETH staked on the Beacon Chain is increasing. This could mean that there are many positive expectations for the success of the upgrade, which could lead several new institutional investors to start allocating a part of their capital in ETH.All Data Supports a Possible Future Appreciation of Ethereum. What Should Be Done?
It is still important to point out that everyone has to do their own research before investing and take into account the different market trends. However, considering that the fundamentals of Ethereum seem to be improving and that the general feeling is positive, it might not be a bad idea to accumulate some ETH for the future. The trend reversal may not happen very soon so meanwhile, you might even want to stake a part of ETH in order to try mediating the purchase price. You can do all of this on Gate.io exchange platform. In fact, there you can not only buy ETH easily, but also allocate your funds in Eth 2.0 staking.Popular News
