We have summarized the most significant reasons to buy and HODL ETH.
- Ethereum is relatively likely to be the base layer infrastructure for Web 3.0
- Ethereum is “deflationary” with a potential to get around 5% in direct return for staking, creating a demand for taking ETH off the market and reducing the supply
- Ethereum has the largest marketcap among all layer 1 blockchains for smart contracts, the most developers, the most dapps deployed, and among the most significant cash reserves in any crypto foundation
- Ethereum base layer blockchain could evolve to be such a robust infrastructure that any financial asset or transaction can take advantage of, makes it impossible to set a roof valuation of the asset.
- Many large companies are starting to see the possibility of taking advantage of the security, transparency, and efficient properties of the Ethereum blockchain ledger for settling transactions on-chain.
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Ethereum Base Layer for Web 3.0
Ethereum has a great chance to be the settlement layer for Web 3.0 including the metaverse.
Web 1.0: 1991-2000 – The internet consisted of static HTML pages which were only possible to read. Users could only consume information with no interactions.
Web 2.0: 2000-Today – Information started to go 2 ways (Users could interact with websites handled by centralized applications on centralized servers). Still, there is no ownership and no control of your data, everything controlled and owned by a 3rd party.
Web 3.0: You are able to control your data and interact directly P2P without a 3rd party trust
With the Web 3.0 fully implemented the 3rd party trust can be bypassed since users can interact directly with each other. Today, the consensus among crypto people is that Ethereum has the biggest chance to be the settlement layer for such interactions. Still, there must be applications to make the interactions user-friendly. These applications can be centralized (but no control of data or settlements) or handled by DAO (Decentralized autonomous organizations)
Ethereum as a deflationary asset giving a Yield
The size of the ballon symbolizes the total amount of all units in a monetary system. An inflationary asset increases in supply (blow up a balloon), while a deflationary asset decreases in supply (punctures a balloon slowly).
Ethereum can check the boxes for some of the highest priorities when institutions are looking to invest capital in new assets.
Here, they are ideally looking for assets with the potential to increase in value, have limited supply, and give a dividend or a yield.
- ETH has the potential to increase in value since more and more applications are using the network creating a demand for ETH
- ETH has reduced the inflation rate from 4.3% to 0.43%, and in addition, they are burning one part of the two folded gas fees. This could even make ETH a deflationary asset.
- There is a potential to stake your ETH to earn 5% APY on your investment.
Ethereum is the Largest Layer 1 Blockchain for Smart Contracts
A lot of data are pointing in the favour of Ethereum, including the NFT exchange volume.
Ethereum is the leading layer 1 blockchain for smartcontracts in terms of
- Ethereum has the highest marketcap, 4x more than BNB, and is the closest competitor in market cap.
- Ethereum has the most fees collected, approximately 5x times the BNB chain fees. Be careful to compare the total fees since high fees with a few transactions are not always preferable over many transactions collecting small fees.
- Most applications are built on Ethereum, around 10x more than EOS or BNB, which holds the 2nd and 3rd position. In addition, the increase rate is healthy.
- The most NFT trading volume, with 10x more than the 2nd place Solana.
- Significant reserves holder by the Ethereum Foundation.
Ethereum as A Global Settlement Layer
Visa is piloting transaction settlement in stablecoins on the Ethereum blockchain.
Many big companies and institutions have started realizing the crypto industry’s potential. Much evidence is promoting this in terms of partnerships in many different areas.
We see these partnerships with both Ethereum and Polygon. Polygon MATIC is the leading layer 2 scaling solution for Ethereum. Read more about Polygon MATIC staking APY and layer 2 solutions.
Ethereum and Polygon Partnerships
Many pilot studies and interests are shown in Ethereum and Polygon.
Some examples include integrations with giants like VISA, Coinbase, Mercedes Benz, Starbucks and Robinhood.
- Visa Will Start Settling Transactions With Crypto Partners In USDC On Ethereum
- Coinbase to Use Polygon’s Ethereum Scaling Solution to Reduce Prices, Settlement Times
- Mercedes Benz and Polygon launch Acentrik for data sharing on the blockchain
- Starbucks Coffee Company is working with Polygon to provide the blockchain technology to build its recently announced Web3 experience.
- Robinhood Selects Polygon to Launch Web3 Wallet Beta
Summary - Where is the Demand for ETH Coming From?
We have summarized some great arguments above why Ethereum can be one of the greatest assets to invest in for the future.
With some of the current giants interested in using the blockchain for settlement, there is little doubt that Ethereum has the chance to be the base layer for Web 3.0 and increase significantly in demand and value.