Ethereum shoots to new all-time high past $1,800 for the first time after CME futures launch

Ethereum shoots to new all-time high past $1,800 for the first time after CME futures launch

Yuriko Nakao/Getty Images

Ethereum on Tuesday hit a new all-time high of $1,800, continuing its upswing since the beginning of 2021.

The token’s record high came a day after nearly 400 ETH futures contracts were traded on the CME.

The CME’s launch of ETH futures could increase price volatility in the coming weeks.

Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The price of Ethereum’s ether hit a fresh record on Tuesday, driven by the launch of CME futures a day ago.

The cryptocurrency soared past $1,800 per token around 09:30 a.m. GMT, rising 10% in the last 24 hours. Ethereum’s all-time high coincided with bitcoin smashing a new record of $48,000 after Tesla revealed a $1.5 billion bitcoin investment, all of which is adding to the momentum of mainstream crypto adoption.

On the CME’s first day of trading ether futures, the exchange saw nearly 400 contracts traded on its platform. That equates to about 19,400 ETH, or $33 million, according to Coin Market Cap. The exchange announced its plans to offer trading in ETH futures in December.

The CME’s launch will significantly strengthen ethereum’s credibility as an asset class just like it did for bitcoin in 2017, said Samantha Yap, founder and CEO of Yap Global. While ethereum is often still referred to as bitcoin’s lesser cousin, there will be a shift in media perception about it with this launch, she said.

Read More: UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold - here’s why the bank says it could end up ‘worthless’

Furthermore, the launch could increase price volatility. A few reasons could contribute to that, according to Gunnar Jaerv, COO at digital-asset custody-provider First Digital Trust.

Institutions would be able to trade in large volumes, as there is now more interest in digital assets than ever before. When the CME launched bitcoin futures in 2017, its price dropped from $20,000 to $13,000 almost immediately.

Separately, with crypto fund manager Grayscale adding more ETH to its trust, traders can expect to see a further rise in institutional interest in digital asset futures, especially as no actual delivery of ETH occurs on the settlement date, making it easier for institutional players to participate as no digital asset custody is required.

Read more: GOLDMAN SACHS: Buy these 13 stocks poised to benefit from surging commodity costs - including 2 set to soar by more than 40%

Which Crypto Projects Are Based on Ethereum?

According to the crypto app tracker, State of the Dapps, there are over 3,000 decentralized apps (also known as “dapps”) currently running on the Ethereum blockchain.

These apps differ from regular mobile and web-based apps because they aim to hand users more control over the data the apps manage. Traditional apps, such as Robinhood or Twitter, are managed by a central authority, which ultimately has the last word on how their customers’ data is secured and used – for better or worse.

Dapps take a decentralized approach to data management, theoretically putting control back in the hands of the user with the help of blockchain technology – the basis of the Ethereum network. Ethereum is the name of both the world’s second-largest cryptocurrency by market capitalization (after bitcoin) and the first platform to facilitate the creation of dapps.

While the promise of Ethereum is tantalizing to proponents of the technology, it’s an open-source platform, meaning the projects built upon it are often experimental and sometimes outright scams. Conducting diligent research before investing is highly recommended.

Top Ethereum projects

Right now, many of the top Ethereum projects are focused on decentralized finance, or DeFi. DeFi aims to expand the utility of cryptocurrencies from day-to-day transactions to more complex financial use cases, such as loans and derivatives.

Subscribe to , By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy

The DeFi space gained significant traction in 2020, with the total value of crypto assets locked in its protocols rising over 2,000% from $650 million at the start of the year to $16.05 billion at the close.

Ethereum dapps have become so popular that the increased congestion has pushed transaction fees – the amount of ether required to send payments over the network – higher than ever. This is a direct result of dapp users competing to get their transactions processed faster by miners. The higher the fee attached to a transaction, the more likely an ETH miner will add that to the blockchain sooner.

MakerDao

Stablecoins are an effort to improve upon one of the pain points of cryptocurrencies. Crypto prices fluctuate unpredictably, making them unsuitable as a means of payment and as a reliable store of wealth. While most stablecoins are centralized, MakerDAO is different in that it has put forth a detailed plan for how to eventually decentralize the control of its stablecoin, dai.

Uniswap

Inflatable unicorn representing Uniswap logo. (Andrey Danilovich/Getty Images)

Uniswap is a decentralized exchange, meaning that unlike most exchanges it never takes control of a user’s funds. It’s the most popular decentralized exchange so far. This exchange is a cornerstone of Ethereum’s recent booming DeFi movement, facilitating trades from coin to coin. The project even attracted a “vampire” competitor, SushiSwap, which tried to suck up all its users. Another unique aspect of Uniswap is that it utilizes an automated market maker (AMM) system for facilitating trading, meaning the underlying liquidity pools that manage the actual coin-swapping are run by smart contracts as opposed to a traditional order book system.

When trading on a regular centralized crypto exchange, the market price for an asset is determined by supply and demand. In order to buy and sell, a trader must find someone on the opposite side of the order book to provide liquidity to complete a transaction. With AMM-based exchanges like Uniswap, a pricing algorithm determines the market price of each asset. Investors are incentivized to provide liquidity which is pooled together and used to execute all trades at the set market prices.

Chainlink

Chainlink is an oracle platform, which means it connects smart contracts with real-time data from the outside world such as weather information or stock prices. A smart contract uses that data to execute pre-defined instructions. For example, payout an insurance claim in the event of a hurricane.

While Chainlink has been around since 2017, the project didn’t really come to the forefront of the space until 2019 – after it partnered with Google. Chainlink is fuelled by an ERC-20 crypto token, LINK, and runs on top of the Ethereum network.

Axie Infinity

Axie Infinity is an online role-playing game where users collect and raise digital, fantastical characters called “Axies.” Under the hood, Axies are types of nonfungible tokens (NFT), which means each one is cryptographically unique, gamers have full ownership over them and in some cases have a monetary value due to their scarce, collectible nature.

Aave

Aave is a decentralized lending and borrowing platform that recently raised $25 million from leading venture capital firms Blockchain.com and Blockchain Capital.

According to tracker DeFi Pulse, Aave is currently the fourth-largest DeFi app based on the $1.14 billion locked up in the app. It was briefly the largest earlier this year.

Other Ethereum dapps

Compound : A decentralized lending platform, Compound is credited with inventing liquidity mining, where the company releases a unique coin that only those providing liquidity to the platform can obtain. This DeFi technique has since become foundational, with users tapping the technique to make money and companies copying the idea to attract users.

A decentralized lending platform, Compound is credited with inventing liquidity mining, where the company releases a unique coin that only those providing liquidity to the platform can obtain. This DeFi technique has since become foundational, with users tapping the technique to make money and companies copying the idea to attract users. WBTC : Wrapped bitcoin is a token on Ethereum that is backed 1:1 by bitcoin. The goal is to bring bitcoin’s liquidity to Ethereum. It has grown in popularity partly because investors can earn interest on the bitcoin they lock up on Ethereum.

Wrapped bitcoin is a token on Ethereum that is backed 1:1 by bitcoin. The goal is to bring bitcoin’s liquidity to Ethereum. It has grown in popularity partly because investors can earn interest on the bitcoin they lock up on Ethereum. SushiSwap : This decentralized exchange (DEX) is a fork of the popular decentralized Uniswap exchange that rewards liquidity providers with its own native SUSHI token. To date, it is a top 10 Ethereum DeFi app, according to DeFi Pulse.

This decentralized exchange (DEX) is a fork of the popular decentralized Uniswap exchange that rewards liquidity providers with its own native SUSHI token. To date, it is a top 10 Ethereum DeFi app, according to DeFi Pulse. Status : An ether wallet and private messaging system.

An ether wallet and private messaging system. Unstoppable Domains : One of the oft-touted goals of Ethereum is to decentralize the internet by making apps that are not controlled by tech giants. Unstoppable Domains is playing its part by creating domains that can’t be taken down by a central entity or government.

One of the oft-touted goals of Ethereum is to decentralize the internet by making apps that are not controlled by tech giants. Unstoppable Domains is playing its part by creating domains that can’t be taken down by a central entity or government. Kyber Network : A popular AMM, like Uniswap, created by researcher Loi Luu.

A popular AMM, like Uniswap, created by researcher Loi Luu. Basic attention token : An ERC-20 token on Ethereum exchanged between users, publishers, and advertisers on the browser Brave. When using the browser, users receive BAT from advertisers for their attention. BAT is a project led by the creator of JavaScript and co-founder of Mozilla, Brendan Eich.

An ERC-20 token on Ethereum exchanged between users, publishers, and advertisers on the browser Brave. When using the browser, users receive BAT from advertisers for their attention. BAT is a project led by the creator of JavaScript and co-founder of Mozilla, Brendan Eich. OpenSea : A marketplace for buying and selling NFTs, including Axies (described above), unstoppable domains, digital art, etc.

A marketplace for buying and selling NFTs, including Axies (described above), unstoppable domains, digital art, etc. Livepeer : A network for decentralized live-streaming, providing an alternative to YouTube.

A network for decentralized live-streaming, providing an alternative to YouTube. Decentraland: A decentralized virtual reality game, where users own virtual plots of land and can build structures such as theme parks and casinos that can be monetized.

Additional types of Ethereum blockchain dapps

There are dozens of other crypto dapps with smaller user bases than the above services. Some were more popular prior to the DeFi boom and have historical importance.

Decentralized Exchanges (DEXs)

Lending Platforms

Stablecoins

Tether: This popular stablecoin actually lives on many blockchains simultaneously. It is now dominating Ethereum transactions.

USDC

PAX

Prediction Markets

Storage Apps

Misc. dapps

Ethereum Surpasses Bitcoin To Become Largest Network For ‘Trustless’ Money Settlement

According to a metric that tracks the on-chain transfer value of blockchain networks, Ethereum recently surpassed Bitcoin to become the largest network for trustless money settlement.

What Happened: Data shows that the Ethereum blockchain is now settling more value in its native cryptocurrency, Ether (ETH) than the Bitcoin blockchain is in Bitcoin (BTC).

“They say reserve currency status is the last to fall when an economic power gets outcompeted,” says popular Ethereum proponent, Ryan Sean Adams.

Transactions on the Ethereum network continued to grow even though gas fees on Ethereum were at record high levels.

Gas fees are payments made by users of the network to validate their transactions on the network. At press time, the average transaction fee was $21.505, down slightly from its peak of $25 on February 5.

While users carrying out transactions on the network have often complained about this, Ethereum miners have largely benefited from the persistently high fees.

Why It Matters: A glassnode report revealed that total miner revenue on the Ethereum network reached an all-time high, with miners earning over $48 million at the time of writing.

Ethereum has plans to introduce EIP-1559, which is an ‘Ethereum Improvement Proposal’ that would reform Ethereum’s fee market.

Essentially, this would direct excess fee income away from miners, by burning one portion of it and returning it to ETH holders.

Once these proposals have been implemented, the network is likely to see even more user adoption. The second largest cryptocurrency by market cap reached a new all time high of $1815 earlier today.