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.
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 Forecast: What Direction the Smart Contracts Hub Going?
Ethereum Forecast: What Direction the Smart Contracts Hub Going?
In cryptocurrency circles, Bitcoin is definitely the superpower. Any random survey on the street would indicate that the pioneer crypto has far greater name recognition.
Regardless, Ethereum is a made asset in its own right. Beginners researching what Ethereum is will be pleasantly surprised to discover that it is an entire sector within crypto. The growth of decentralized finance in 2020 was impressive, to say the least. These decentralized systems can democratize finance and make services more accessible for billions.
That is the essence of decentralized finance. Traditional finance had a centralization aspect that concentrated power in the hands of few. DeFi apps are granting developers unique tools to innovate and revolutionize finance.
Ethereum Has an Ascending Channel Pattern
You may think all cryptocurrencies are like Bitcoin. Not at all. Ethereum is much more than a store of value. The platform hosts thousands of decentralized applications that have real-world uses.
Ethereum rose in 2020 and this year on the strength of these applications. Institutional capital has followed the maturity of DeFi, pushing the industry past previous highs.
These use cases are likely to drive Ethereum in the future. The Ethereum blockchain has more versatility than the Bitcoin blockchain. Accordingly, developers have found a home to write code, create rules, and release applications. These applications run on “smart contracts,” which validate agreements without a supervising third party.
Decentralized platforms facilitate lending, trading, and even exchange services. The most significant decentralized exchange is Uniswap which moves billions in Ether and other assets every day. Blockchain provenance is creating an innovation boom that is disrupting finance all over.
Ether is at the center of this booming decentralized economy. The Wall Street Journal reported that 7 million new accounts that hold Ethereum balances were created in the first four months of 2021. This staggering number took existing accounts to over 55 million. Ethereum is now having a congestion problem because of the sheer number of transactions on the network. Luckily, Ethereum developers have enacted a series of upgrades to take the network to a new era of scalability called Serenity.
Additionally, the rise of non-fungible tokens (NFTs) provides more dynamism to Ethereum investors. NFTs create a unique ID or pieces of digital art with set rules for transferring ownership. Content creators and artists can write into a smart contract a piece of digital art and sell it as an NFT. This represents a new era in the marketing of digital art. Already, some NFTs are fetching millions of dollars at auctions.
The duality of DeFi applications and the NFT sector give Ethereum tremendous upside. Think of Ethereum as Google Playstore or Apple Store. It is a hub for many other financial services. Its use-cases will continue to expand as far as the imagination of smart contract developers goes.
Purchasing and Trading Ether Is Very Simple
It is fair to state that the price of Ether has only scratched the surface. The past twelve months were only a glimpse of what Ether is capable of.
Ethereum’s power is that it is at the center of a financial revolution. The true potential of decentralized finance and smart contracts will become apparent with time.
Purchasing Ethereum is quite simple. Follow these steps:
Find an exchange or brokerage platform like eToro to purchase Ethereum- These platforms make the sign-up process very simple.
Verify your account to ensure it is secure- This process typically entails providing basic identity details such as proof of address or passport.
Connect a payment channel such as a card or bank.
Deposit fiat into your account. Alternatively, if you have other cryptocurrencies, you can send them to your wallet address.
Make your first ETH purchase!
To Wrap It Up
Ethereum is one of the most important innovations of the past decade. Its position at the center of the next era of finance is taking shape.
Cryptocurrencies rely on supply and demand to determine prices. This is why Ethereum and other coins still exhibit significant volatility. That said, this volatility is an opportunity in itself.
In summary, Ethereum is a sleeping giant. The use cases for this platform and asset will only continue to grow as decentralized finance takes over.