High fees on Ethereum were a constant throughout all of 2021.
Second layer solutions are emerging as the favorite option to achieve scalability.
Ethereum had a busy year. Some events that occurred in 2021 benefited its users and investors, while others caused headaches for those who needed to operate in this general-purpose network specialized in smart contracts.
The Ethereum Foundation development team is moving towards the long-awaited merge, when the current blockchain will merge with version 2.0 of the network. Meanwhile, other things keep happening in the etherean ecosystem.
On this occasion, CriptoNoticias presents a annual balance in which they are revived 10 facts that marked the 2021 of Ethereum . It includes technological advances, price and market issues, and fashions and trends that stood out in the year that just ended.
one. Year of all-time highs for decentralized finance
Without a doubt, 2020 went down in history as the year of DeFi-mania. It was then that decentralized finance (DeFi) and more precisely the yield farming (or agricultural yield) captured all the attention.
But if we look at the numbers, we see that 2021 was a much better year for the DeFi industry , in terms of adoption and value deposited on the platforms. This is shown by the statistics website DeFiPulse .
At the beginning of November 2021, USD 110 billion was in decentralized finance smart contracts. That’s a figure four times higher than the USD 25 billion at the end of 2020.
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2021 was a year of all-time highs for the value deposited on DeFi platforms. Source:
DeFi Pulse .
Someone could object, with some reason, that the rise in the price of cryptocurrencies – more precisely Ethereum – is responsible for this increase in value in DeFi. In part, it is true. But if the figure is analyzed not in dollars but in ether (ETH), Ethereum’s native cryptocurrency, it is seen that 2021 was also a year of all-time highs (although these were reached in April with 11 million ETH deposited).
2021 was also a record year for hacks in DeFi . In August, there was the largest theft in history of a decentralized finance platform. PolyNetwork security was breached and the The attacker seized the sum of USD 600 million in various tokens of the Ethereum, Polygon and Binance Smart Chain blockchains.
The event had an ending that can be considered happy. The person responsible for the attack — nicknamed Mr. White Hat— returned the stolen cryptocurrencies and tokens . Apparently, he was a “white hat” hacker, that is, he acts with the aim of detecting security problems and then helping to solve them.
two. Traditional finance sets eyes on Ethereum
Ethereum, like many other cryptocurrencies, presents itself as a decentralized alternative to the financial system. That doesn’t stop stock investors from looking at blockchains with desire . They do not want to be left out and request the possibility of accessing crypto assets from their traditional brokers and brokerages.
The United States Securities and Exchange Commission (also known by its acronym in English, SEC) received numerous requests for approval of an Ethereum ETF (both futures and spot). So far, none have had the go-ahead from the regulator, which has already approved certain bitcoin (BTC) funds.
Although Wall Street It is the financial capital of the world, in other countries Ethereum is also present. Canada, for example, approved ether’s first ETF early of this year , the IC Galaxy Ethereum.
CI Financial, the company responsible for the ETF pointed out on that occasion, as CriptoNoticias reviewed:
With these funds, we are reducing sticking points that investors have traditionally faced when buying and holding cryptocurrencies. The CI Galaxy Ethereum ETF is an important addition to that line, as this emerging asset class gains increasing interest and validation.
🔴 BREAKING: CVM approves the 1st Ethereum ETF in Latin America, or QETH11.
O ETF by QR Asset Management, manager of the QR Capital group, will be listed in B3, which becomes 1st stock exchange in Latin America at a 100% Ethereum ETF. pic.twitter.com/idluRrN2zq
Several banks set their eyes on Ethereum to start offering products related to this blockchain. This is the case of BBVA which, a couple of weeks ago announced that it would incorporate ether sale and custody services for its customers in Switzerland.
Some months ago, in April, the European Investment Bank (EIB) began an inquiry for the launch of digital bonds on the Ethereum blockchain. The negotiations are expected to be supervised by financial giants such as Goldman Sachs, Banco Santander and Société Générale.
Cases such as those mentioned here put in evidence a paradigm shift in the relationship between cryptocurrencies and the traditional financial system . The large banks no longer see crypto assets as competitors but as financial products of which They can obtain an economic profit.
This brings as a consequence a greater state intervention and regulations on the industry. Like it or not, it is a reality that cannot be ignored and each actor in the ecosystem (users, bitcoiners, ethereans , businessmen, etc.) must take the necessary precautions to act accordingly in accordance with their objectives, interests, possibilities or convictions.
3. Ethereum 2.0 Staking grew 500% in 2021
From January 1, 2021 to the time of writing this article, the number of Ethereum 2.0 validators increased almost 500% . The number went from 48,000 to 275,000. in a year.
These are entities (which can be people, pools or institutional users) that deposited at least 32 ETH in the contract corresponding smart.
The number of Ethereum 2.0 validators increased almost 5 times in one year . Source: Beaconcha.in.
Such as CriptoNoticias reported days ago , most of these validators (more than 60%) are unknown entities. It can be assumed that they are independent validators (that is, they are not part of a pool of staking ).
The possibility that a few entities control a large number of these validators is also open. Many consider that such a situation would be risky for the decentralization that is intended in Ethereum.
Ethereum 2.0 validators will only be able to withdraw their coins staking when the long-awaited merger occurs. At that time, Etherum 1.0 accounting will “get” inside the Beacon Chain (Ethereum 2.0 blockchain) and mining will be definitively abandoned to move to a proof-of-stake (PoS) algorithm .
4. Berlin, the first hard-fork of Ethereum in 2021
The Ethereum network had two major updates in 2021, which were produced by hard forks ( hard-forks ) of the chain. The first of them, Berlin, took place on April 14, at the height of block 12,244,000 .
The EIP-2565 : changed the algorithm with which the cost of fares is calculated.
The EIP-2929 : also related to rates, increases them for certain operations. The objective is to provide greater security and protect the network against potential denial of service (DDOS) attacks.
The EIP-2718 : facilitates the creation of new types of transactions .
The EIP -2930 : add a transaction type with an access list, a list of addresses and storage keys.
Together, with these modifications, was intended to make a network faster, safer and cheaper . As will be seen later in this text, the last point was not achieved (or at least not instantly) and work continues in order to reduce fees paid on Ethereum .
5. The price of ETH rewarded holders in 2021
In the cryptocurrency market, bitcoin has historically been the leader guiding the pack and 2021 was no exception.
The coin created by Satoshi Nakamoto hit new all-time highs this year and ETH went after it. The ETH price chart below shows its marked upward trend over the last 12 months:
Then Along with the general decline in the entire cryptocurrency market, ETH traded close to $ 1,600 in June and July.
After that correction, the second cryptocurrency with the highest market capitalization continued its upward course and reached on November 16 what, so far, is its all-time high: USD 4,891.
In the last week of 2020 the price of the digital asset was around USD 3,700 and USD 4,200.
Predictions for next year are mixed . According to many analysts – for example, Willy Woo – the cryptocurrency market, with BTC leading the way, would continue in an uptrend at least during the first months of 2022. If such a situation is fulfilled, then probably ETH will accompany it and perhaps they can see new maximum prices.
But there are also those who are not so optimistic and forecast a general drop in prices . Possible new isolations due to variants of COVID-19 and other macroeconomic factors on a global scale would have enough force to put crypto-asset prices in the red.
At the end of 2020 and the beginning of 2021, both directions are possible and there is no clear signal that indicates where the prices of cryptocurrencies in general and ether in particular are going.
Anyone who has been involved in the world of cryptocurrencies for a few years knows that new fads and trends are constantly appearing and capturing all the attention. In 2021, several of these novelties chose Ethereum as the favorite blockchain in which to develop.
The NFT-mania was unleashed in 2021. Non-fungible tokens (better known by its acronym in English, NFT), unlike cryptocurrencies, they are not equivalent to each other. That is, each one is distinguishable, unique.
This characteristic makes it possible for them to be used to demonstrate possession of an object that may be digital. (for example, an image) or the real world (for example, a house). In the year that just ended, many artists decided to use them to market their works.
It was also in 2021 when NFT marketplaces gained momentum. The decentralized marketplace OpenSea has grown considerably and offers tens of thousands of collectible tokens.
OpenSea is the largest collectible token market on Ethereu. Source: DappRadar.com.
The largest cryptocurrency exchange by trade volume, Binance, did not want to be left behind and also launched its own NFT section within its platform.
Throughout the year, CriptoNoticias reported how sport clubs, musicians , plastic artists, gastronomic companies and a long etcetera, they joined the NFT-mania and released their own tok ens.
Games play-to-earn
Related to this, another of the industries that boomed in 2021 was video games on blockchains.
Games to earn cryptocurrencies (or play-to-earn), although they have existed for several years, They were all the rage last year . It all started when testimonies from people as far away as Philippines
or Venezuela, who managed to win a good amount of money, precisely with the game Axie Infinity.
Word of mouth (or tweet to tweet) was running and more and more people were introduced to this and other play-to-earn games, sparking widespread FOMO. As indicated by the CryptoNews Glossary , this is the acronym in English for “fear of being left out”, that is, of missing an important opportunity.
The price of AXS (Axie Infinity governance token) started the year at USD 0.54 and peaked at USD 165 on November 6.
A whole business ecosystem was developed around this game that includes an informal employer-employer relationship. employee, through the scholarship system .
Other play-to-earn games also emerged, although they did not achieve the massiveness of Axie Infinity and many seem to be in a tendency to disappear, such as is the case of Plant Vs. Undead , which runs on the Binance Smart Chain.
Shiba Inu
In the midst of the NFT-mania and the fury of video games, a new inhabitant of the etherean universe began to make his voice (or, rather, his bark) heard: Shiba Inu .
Although it had existed for several months, it was in May when this memecoin (developed as an ERC-20 token) began to gain relevance , after being listed on the Binance exchange , which explained at the time:
Shiba Inu is an experiment on a decentralized community and another meme currency similar to dogecoin. SHIB is Shiba Inu’s native token and will be the first token to be listed and used as an incentive for ShibaSwap, a decentralized exchange.
Binance, cryptocurrency exchange.
This cryptocurrency reached the top 10 of the market , and its price increase was reported in several CryptoNews bulletins . Its defenders allege that the developers s have big expansion plans and its detractors argue that it is just a memecoin or a shitcoin , no intrinsic value.
The shiba inu token was positioned among the top 10 crypto assets, according to its market capitalization. Metaverses
The historical value invested in the sales of items on web 3.0, such as land, goods and services virtual, has exceeded USD 200 million. By eliminating the centralized web 2.0 companies that have historically controlled these online spaces, virtual worlds have benefited from rapid innovation and advertising gains.
Grayscale, company of investments.
With the initial impulse provided by the Meta company, the industry around to metaverses it indicates that it will continue to grow in 2022 . However, it could present scalability problems if computational resources are not created to support these virtual universes.
A recent report from the manufacturer Intel hardware shows that “metaverses will require 1,000 times your current computing power.” Explains Raja Koduri, director of the aforementioned company: “our current computing, storage and network structure is simply not enough.”
7. A year of nightmares for fees on Ethereum
The trends that came to Ethereum, which were named in the previous point, brought with them a huge flow of users. The problem is that the network was not prepared to receive them and there was a 2021 of congestion, delays and high rates to be able to operate.
Such amounts make Ethereum a network that, according to some, is elitist. Leave many out. In addition, the user experience due to frequent delays is not the best.
At the beginning of December, this media reported that numerous users and developers “flee” from Ethereum to other blockchains to have a better user experience when operating in decentralized applications . Binance Smart Chain , Polygon, Solana, Avalanche and Terra have been some of the blockchains that benefited from the exodus.
The Tron network also gained prominence, especially for sending and receiving of Tether USD (USDT), the main stablecoin according to its market capitalization. In June 2021, the Bitfinex exchange reported that processed 4 times more USDT transactions on Tron than on Ethereum .
8. The London hard-fork and EIP-1559: hope for Ethereum
The second hard-fork produced on Ethereum in 2021 was London. It occurred on August 5 at the height of block 12,965,000.
This fork brought with it the long-awaited improvement proposal EIP-1559 . Since then, Ethereum has a new fee mechanism. Now, miners are paid a base fee (which is burned) and a tip is added (which is received by whoever miners the block) .
The idea of that, as of the activation of the EIP-1559, the fees in Ethereum would be reduced. This, although he is thinking like this, is a benefit that would be enjoyed in the long term.
Unlike Bitcoin , in Ethereum there is no maximum current of ETH. This, in the long term, could have negative consequences for the price of the cryptocurrency, due to its constant inflation.
9. Change of strategy: Ethereum’s scalability will be in layer 2.
Now, no one expects EIP-1559 or some new improvement proposal to instantly fix the problem of congestion on Ethereum. The idea is widely accepted that scalability will occur outside the mainnet .
This is the reason why great importance is attached to the development of second layer solutions such as rollups . These implementations “wrap” various Ethereum transactions (they can be ETH shipments, tokens, or smart contract signatures) and execute them off the main chain. In this way, you do not suffer from network congestion and you do not have to pay high fees to miners.
Vitalik Buterin himself, creator of Ethereum, thinks of a “rollupcentric” future . In a recent text of his authorship, reviewed by CriptoNoticias, the developer claims to be aware that these solutions scalability tend to centralization . However, it ensures that this will not be a problem if the main Ethereum layer remains strong and decentralized, with numerous distributed nodes.
In addition to rollups, Ethereum’s sidechains (or sidechains) are developing and gaining ground in terms of adoption . Among them are highlights Polygon (previously called Matic). This is a fork of Ethereum with its own accounting. Its native currency is not ETH but Matic.
The developer team – originally from India – presents an Ethereum-friendly narrative. It does not seek to be a competition for the main network but a contribution to its scalability. This is why they have managed to attract several platforms traditionally developed only in Ethereum, such as Aave , OpenSea, PoolTogether and more recently Uniswap.
10. The end of mining on Ethereum is coming … or so they say
Everything is moving towards the full implementation of Ethereum 2.0. Among other changes, it will bring with it the abandonment of the proof of work (mining) to lead to the proof of stake ( staking ) .
In the Ethereum community there is a constant feeling of imminence about the arrival of the new version of the network. But the truth is that its final release has already been delayed many times.
Ethereum mining will cease to exist when Ethereum 2.0 is fully operational.
One of the believes that mining will be abandoned in 2022 is businessman Ryan Sean Adams, CEO of investment firm Mythos Capital. According stated in November , it would take between 5 and 8 months for Ethereum to go fully to version 2.0.
But there are signs that everything may not happen so quickly. At the beginning of December the difficulty bomb was delayed again in Ethereum, which is evidence that .
Difficulty bomb is a mechanism that makes ETH mining difficult, leading to the Ice Age, a period in which there will be no mining activity, a process prior to the merger between the current blockchain and the Beacon Chain.
Vitalik Buterin, as reported by CriptoNoticias in early December, announced that Ethereum 2.0 would take at least one more year . In a roadmap published by the Russian-Canadian developer, it was announced that, to produce the long-awaited merger, there are still several stages and modules about to finish.
A year full of news about Ethereum
As is evident in these lines, Ethereum gave a buzz in 2021 and CriptoNoticias has reported it. in detail. Technological, market, business and even entertainment issues had Ethereum as the protagonist.
The year that begins today, without a doubt, It will also be packed with news about this and other blockchains, cryptocurrencies, tokens and related developments. We invite you to join us for another year and continue to inform us in 2022 .
Happy New Year!
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