Consensus 2021: 8 Questions for Ethereum’s Andrew Keys

Consensus 2021: 8 Questions for Ethereum’s Andrew Keys

Often called the “Ethereum oracle,” DARMA Capital’s Andrew Keys sat down with CoinDesk during Consensus 2021 for a brief interview covering his prediction rate for this year so far, and what’s next for ETH and DeFi now that everything seems to have hit its stride.

What do you make of the second all-virtual Consensus? Is this a format you would hope to see continue even as the world returns to normal? Any thoughts on the metaverse replacing real life?

Call me old-fashioned, but I miss the human connection and look forward to attending in person next year. That said, it’s great that people have the ability to access the subject matter expertise that comes to Consensus, from anywhere in the world.

Related: China’s BSN Builder Urges Developers to Look Beyond Cryptocurrency Andrew Keys, co-founder of Darma Capital, is a speaker on “Ether for Institutions: The Next Frontier” at Consensus 2021. Register here.

There’s a lot of talk about ETH being “ultra-sound money.” Is this an idea you buy into – or is it just wishful thinking?

I absolutely agree with this concept. Ether is an asset unlike the world has ever seen. It has three core properties that make it valuable as:

A capital asset: Owners of ETH own a piece of fees of world’s global settlement layer.

A consumable asset: ETH is a fuel, a digital commodity. For every computational step in Ethereum, a certain amount of ETH is “burnt.”

A storage of value asset: ETH can be freely traded or used as collateral to borrow against in digital economy.

Two imminent catalysts to increasing the value of Ethereum include EIP 1559, wherein ether is burnt for every computational and storage transaction; and Transition to PoS, which reduces “sell pressure” associated with proof-of-work mining costs like electricity, hardware and real estate. Most miners have to sell 75% of what they mine to pay these monthly expenses.

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There’s a growing narrative that traditional finance folks understand Ethereum more than Bitcoin. Is this a replay of the “blockchain, not bitcoin” debates of the past?

Bitcoin addresses one simple use case. It’s digital gold with a total addressable market (TAM) of $10 trillion. With bitcoin, Alice can send Bob value peer-to-peer and it’s provably scarce. This is a non-trivial use case, and Bitcoin has been the patriarch of blockchain, but there’s much more we can do with next-generation blockchain databases.

Ethereum is the substrate to the digital economy. Its TAM is $270 trillion, for its total economy. Ethereum can digitize all assets (commodities, fiat, stocks, derivatives, insurance policies and prescriptions) as well as financial instruments (loans, derivatives and exchanges) and legal agreements (employment, syndication, purchase orders and investments).

What’s your investment thesis?

We’re witnessing the birth of the digital economy. Ethereum is the only blockchain on Earth capable of being the substrate of the digital economy. Ether is an asset unlike any asset we’ve ever seen before. We invest in ether and the picks and shovels around Ethereum (like layer 2 scaling solutions) to help increase adoption.

You called Coinbase the AOL of Web 3.0. What’s next?

Ethereum will exceed Bitcoin’s market capitalization in 2022.

Decentralized exchanges are growing rapidly, but there’s a genuine concern that they’re little more than ways to financialize token products. When will DEXs be able to support actual capital deployment and influence things in the physical world?

[Decentralized finance] has over $100 billion in [total value locked] with Ethereum settling $1.5 trillion of transactions in Q1 ‘21 … actual capital deployment is happening right now. Last month, [European Investment Bank], [Goldman Sachs] and [Société Générale] had to spend ether in order to issue a bond. Those entities needed ether for operating expenses. It’s happening right now.

You’re known for your yearly Ethereum predictions. Have any been proven true so far?

I’ll defer to the fact-checkers, but in my view all of them have come true to some extent. One that I’m particularly proud of is 2021 being a breakthrough year for layer 2 solutions. What we’re seeing across the layer 2 landscape right now – particularly advancements in finality and security – makes me more confident than ever in the commercial viability of blockchain-based applications.

Any predictions for when ETH 2.0 will go live?

By Jan. 31, 2022.

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Ethereum price jumps 1187% in a year! Here’s a look at interesting Ether buying trends in India (Survey)

Ethereum. Representative image/Pixabay

Ethereum price has Jumped 1187.3 per cent since last year, giving this cryptocurrency backing a namesake blockchain platform a market valuation of around $313.9 billion. Ethereum is a blockchain-based platform for developing decentralized apps and smart contracts. Ether is the native cryptocurrency used for all the transactions on Ethereum’s blockchain.

Created in 2015 by Vitalik Buterin, it is the second most valuable cryptocurrency after Bitcoin. Ethereum is also considered more than just a digital currency. In India, Ethereum is a big hit among traders as the country is home to one of the biggest IT hubs in the world. A lot of developers working on Ethereum Blockchain in India are also contributing to its popularity among traders in the country.

A survey by cryptocurrency exchange BuyUcoin among its 114,000 users reveals some interesting Ether buying trends in India. Here’s at key findings of the survey:

1. Top 5 states Geographies for Ether Investment

– Tamil Nadu is the winner with the most interest in Ethereum with a share of 20.16%, followed by Maharashtra with 15.83%, Karnataka 9.27%, Delhi 8.99% and Uttar Pradesh 7.90%.

2. Delhi and Uttar Pradesh account for more than 16% of Ethereum traders

3. Female traders are more than 14% showing a 780% Growth per Year. Male traders are more than 85% showing a 3482.32% Growth per Year

ALSO READ | Decrypting Cryptocurrency: Is this the right time to invest in Bitcoin and others?

4. Age Group 25-34 Invests most into Ethereum and 18-24 Comes second. For age group trends 25-34 leads the way with accounting 36.04%, next we have 18-24 with 29.36%, 35-44 accounts for 17.36%, 45-54 has 8.89%, 55-64 having 4.86% and 65+ showing a meagre 2.95%.

5. Top 5 Ethereum Investing States Tamil Nadu, Maharashtra, Karnataka, Delhi, and Uttar Pradesh constitute More than 62% of Investors

6. 2.95% of Indian traders who invest in Ethereum are Above Age 65.

7. Indian Traders of Age Group 18-44 accounts for more than 82% of Ethereum Investors and more than 16% are from the age group of 45+

The recent Ethereum bull run attracted a lot of new users into buying Ethereum.

“All the data shows that Ethereum is not too behind bitcoin in its popularity and its usability and features of smart contract are certainly an added feature which amount its popularity among the developer community, Ethereum is benefiting from the popularity of decentralized finance (DeFi) and non-fungible tokens (NFTs), which heavily utilize its blockchain ecosystem,” the survey said.

At the time of writing this report, Ethereum was trading at Rs 209,851 on crypto exchanges.

Ethereum Founder Vitalik Buterin Has a Solution to Bitcoin’s Environmental Problem

Renewable energy pioneer Elon Musk recently made a 180-degree turn on Bitcoin, announcing that Tesla would no longer accept the cryptocurrency as a payment method after realizing that Bitcoin mining and transaction consume too much electricity generated from fossil fuel. “Cryptocurrency is a good idea on many levels…but this cannot come at great cost to the environment,” the billionaire tweeted on May 12.

Bitcoin’s main rival, Ethereum, may have a solution to this problem soon, according to its creators. Ethereum inventor Vitalik Buterin suggests restructuring the underlying blockchain network that facilitates crypto transactions.

The core issue of Bitcoin’s electricity problem is what’s known as the “proof of work” system, a consensus mechanism that both Bitcoin and Ethereum currently operate on to confirm transactions and add new blocks to the chain. Such a system requires a global network of computers to run simultaneously every time a crypto transaction takes place, incurring high energy costs. According to the Cambridge Bitcoin Electricity Consumption Index, which Musk cited in his Bitcoin argument, the current blockchain network supporting Bitcoin transactions uses more power per year than Pakistan, a country with a population of 217 million (as of 2019).

The engineers behind Ethereum seek to solve this problem by switching to a “proof of stake” system, where only Ether holders—rather than any miners who are willing to pay energy costs for a potential crypto reward as in proof of work—are likely to be chosen to validate transactions.

“Switching to proof-of-stake has become more urgent for us because of how crypto and Ethereum have grown over the last year,” Buterin said in an interview with Bloomberg on Sunday. “I’m definitely very happy that one of the biggest problems of blockchain will go away when proof of stake is complete. It’s amazing.”

In proof of work, crypto miners are essentially in a constant race to confirm new transactions. They foot the bill of hardware and energy costs as an investment, and the winner is rewarded with a free cryptocurrency (which is why they are called miners). In proof of stake, miners “invest” Ether they already own, instead of paying high energy bills, to compete for the next batch of transactions, which will still be rewarded with free crypto.

Because only those who own Ether can participate, “the only electricity cost will come from the servers that host Ethereum nodes, similar to any company that uses cloud-based computing,” Bloomberg explained.

Buterin hopes the system update will complete by the end of 2021. That will be over a year earlier than what was expected in December.

Ethereum’s current proof of work system uses 45,000 gigawatt hours per year, according to the Ethereum Foundation, which funds the development of the Ethereum protocol. With proof of stake, “you can verify a blockchain with a consumer laptop,” said Danny Ryan, a researcher at the foundation. “My estimate is that you’d see 1/10,000th of the energy than the current Ethereum network.”