Disclaimer
This website does not offer financial advice. Our goal is to provide relevant information for investors, professionals, and researchers, as well as raise awareness about possible issues. Please note that cryptographic assets are highly volatile and the industry lacks regulation, which can lead to market manipulations.
Introduction
Ethereum is the second-largest cryptocurrency by market capitalization and the protocol that introduced smart contracts, paving the way to bring finance and various services to the crypto world.
Innovation: 9.5
Differential: 9
Ethereum was the first network to offer so-called smart contracts and enable the creation of dApps on the blockchain. Thus, it laid the foundation for decentralized finance, as well as incorporating games, oracles, and NFTs.
On the other hand, the network is relatively slow and expensive, which has made other blockchains more appealing, especially to retail investors.
Utility: 10
The ETH token is used to pay for transaction fees on the blockchain and issued to reward its validators. Thus, it is the gateway to the most robust ecosystem in crypto and one of the most liquid assets in the market.
With the recent transition of the blockchain to the Proof-of-Stake mechanism, it gained greater functionality by also being used in staking to generate income for holders. The slashing mechanism uses these ETH to punish malicious validators, reinforcing the network's security.
Ecosystem: 9.5
Adoption: 10
The network has around 500,000 active wallets per day, moving billions of dollars daily. Active users and transaction volumes have shown a growth trend in the last market cycle, and the outlook is that it will increase in the future with updates on the mainnet, mainly through rollups.
It is the hegemonic leader in DeFi, accounting for around half of the total crypto TVL. Ethereum NFTs are the most valuable in the market, with major marketplaces present, notably OpenSea and Blur. It also houses the largest representatives of the Metaverse in Web3: Decentraland and Sandbox.
Development: 9
Ethereum is by far the ecosystem with the most active developers, with over 5,000. Virtually all pioneering solutions in crypto arrive first on Ethereum.
The network's roadmap is ambitious and should still extend for years, having undergone several delays and changes of direction. After the recent Shanghai upgrade, the most anticipated is the so-called Danksharding, with a "proto" version already advanced, which should greatly increase speed and reduce costs.
Tokenomics: 7.7
Inflation: 7
Ethereum does not have a maximum token supply, but the EIP-1559 upgrade introduced a mechanism for burning part of the transaction fees. This has been making ETH slightly deflationary in recent months, although it depends on network activity.
On the other hand, upgrades aimed at reducing fees on the blockchain tend to result in a reduction in ETH burning. In 2023, inflationary pressure is expected to be exceptionally high due to the unlocking of around $30 billion worth of ETH that was staked, or 14.75% of the total supply.
Distribution: 8
When ETH was launched in 2014, 83.33% of the 72 million tokens were sold to participants in the Ethereum Crowdsale to finance the project. The remaining 16.67% was allocated to the Ethereum Foundation, early contributors, and others.
This distribution brought considerable concentration but less than that of most blockchains. There are no portions for special incentives to validators, users, or developers, but this has not prevented Ethereum's leadership in volume and TVL.
Sustainability: 8
The network generates millions of dollars in fees daily, being the crypto project that generates the most revenue. It also has high growth potential with future upgrades, after losing some dominance to cheaper competitors.
On the other hand, these same upgrades will only bring competitiveness through fee reduction, which should reduce token burning and profitability for stakers.
Safety: 7.0
System: 8
The network has no record of direct attacks on the mainnet, suffering only from some bugs in 2016. On the other hand, it suffers from congestion and high fees during peaks of demand.
Being the blockchain that concentrates the most liquidity, its DApps are frequent targets of hackers. The most famous happened in 2016 when a million-dollar attack on The DAO project led the Ethereum Foundation to restart the network to erase the theft transaction, which caused great controversy and led to a hard fork that created Ethereum Classic.
Market: 8
ETH entered the market priced at an initial price of $2.80 and reached a high of $4,878 at the end of 2021.
Since then, it has fallen almost 80% to below $1,000, but has been recovering since early 2023 to around $2,000 at the time of writing. In the long term, it has shown a strong upward trend since its creation.
Decentralization: 5
Ethereum is generally seen as a decentralized project, although ETH is not a token with governance rights. The community can propose updates, but these are subject to approval by the developers.
A new phase of updates, known as The Scourge, is expected to bring greater decentralization in the future. On the other hand, after the migration to Proof-of-Stake, validation on the network has become more centralized, as 4 entities control more than 50% of the ETH in staking.
Final rate: 8.2
