As DiFi platforms boom supply is removed from exchanges creating quite possibly the perfect crypto storm.
If you're reading this you're probably already bullish on DiFi, and sentiment is certainly high right now across the board.
But why is DiFi going to take ETH and alt prices to the next level, possibly even during the next crypto winter?
Ethereum Active Supply || Source: Glassnode
We've already started to see ETH supply drop from exchanges across the board, similar to what we saw with Bitcoin preceding the 2017 bull run.
This low of 14,673,836 ETH recorded in January plotted against a circulating supply of apx 114,533,750 ETH tells us supply is in the area of a mere 12.8%.
That is fantastic news for those holding ETH and and maybe not so good for those that are looking to acquire.
Ethereum itself is transitioning from a Proof-of-Work (PoW) model to Proof-of-Stake (PoS). By staking 32 ETH users gain access to validator software.
As a validator you’ll be responsible for storing data, processing transactions, and adding new blocks to the blockchain. This will keep Ethereum secure for everyone and earn you new ETH in the process. This process, known as proof-of-stake, is being introduced by the Beacon Chain. - https://ethereum.org/
If a solo validator isn't your cup of tea users are able to contribute various amounts of ETH to staking pools.
A trend we are seeing across the board in all kinds of projects from DiFi platforms to even Blockchain Gaming.
Staking pools and DiFi Platforms are beginning to line up to stake your liquid coins and tokens and offer great rewards in return.
Exchanges are getting in on the action too!
Exchanges such Binance and Kraken both have programs to reward users who stake ETH. The beauty of these pools is that you can earn by participating in validation, while earning tokens that are compatible with protocols like ERC20 allowing you to further leverage your rewards.
DiFi Meets Blockchain Gaming
We are even seeing this trend merge into blockchain gaming with new platforms like rplanet.io utilizing the WAX blockchain allowing gamers to stake unused NFT's and earn a native 2nd layer token for doing so.
I believe we are on the verge of seeing DiFi enter almost every facet of web 3.0, as we inch closer to a revolutionary flippening from fiat to crypto.
The net effect of staking assets into pools is less liquid supply on exchanges!
Now let's add the fact that institutions are starting to move into digital assets like BTC. This shift won't stop with institutions loading their bags, as I believe most large cap corps and even governments are going to use crypto to hedge against fiat in the future.
This week we saw the World 2021 conference introduce BTC financial strategies to some of the planets top executives.
Governments from the municipal right up to federal levels will be looking at how they can leverage cryptocurrency. We have already seen Miami's mayor communicate intentions to move the city into BTC to pay employees, collect taxes, and add it to their treasury.
BTC is the gateway drug that will get institutions into ETH. We know top funds are already acquiring large amounts of ETH, this is only going to increase.
These companies and governments are not only going to want to boost their treasuries but why not pull up a chair and have a seat at the table in the new are of DiFi.
The perfect storm is where. The tipping point may or may not be in 2021 but make no mistake it's approaching.
Ciao for now,
@agr8buzz