Since its creation in 2015, Ethereum (ETH 0.14%) has made serious progress. However, when we look a little deeper into why Ethereum was able to put up a 13,000% increase, there are three reasons the world's leading smart-contract blockchain might only be getting started and continue to reward investors for the coming years.
CRYPTO: ETH
Key Data Points
1. Work in progress
For starters, we can't talk about Ethereum without discussing one of the unique aspects about this cryptocurrency: It is constantly evolving. Ethereum's ultimate goal is to become "powerful enough to help all of humanity," and it has a concrete and detailed road map for how it will get there.
Over the last few years, you might have heard about the London hardfork, The Merge, and Shanghai. These are all nicknames given to upgrades that add new features to the Ethereum blockchain so that it can be more effective at supporting a growing user base without sacrificing speeds or increasing network fees.
These upgrades are only small steps in fulfilling Ethereum's ultimate vision. In fact, Ethereum is only 60% complete. After the highly anticipated Merge went live in September, Ethereum's co-founder ascertained that there was still a remaining 40% left to go before the blockchain would reach its full potential.
2. Ethereum enters a new age
While The Merge dominated headlines for most of 2022, there was an earlier, more important upgrade that drew little attention. Known as the London hardfork, this upgrade went live in August 2021 and laid the foundation for The Merge. Arguably, it might end up doing more for Ethereum's price than The Merge itself.
With the implementation of the London hardfork, Ethereum actually became a deflationary asset. The details can be a little complex, but in essence, the London hardfork made it so that as Ethereum increases in use, more ether (the blockchain's native cryptocurrency) is burned and removed from circulation. Before the London hardfork, Ethereum's annual inflation rate was around 3.5%. However, now Ethereum is actually deflationary and boasts a rate of -0.48%.
The new "burn" feature makes it so that the rate of ether entering circulation not only slows but at times even reduces the total supply. As a result of the London hardfork, Ethereum's price has entered a new age, which will be subject to limited supply and increasing demand.
3. The one and only leader
These upgrades, and ones to eventually come, will likely only increase Ethereum's grasp on the world of decentralized finance (DeFi) -- a lucrative, burgeoning sector of cryptocurrency and blockchain technology that's dominated by Ethereum. At one point, Ethereum supported more than 90% of the entire DeFi economy. Although this share has declined with the rise of new DeFi-capable blockchains, they have little to no shot of unseating Ethereum as the DeFi leader.
Today Ethereum makes up nearly 60% of the total value in DeFi, worth more than $30 billion. The next closest competitor is Tron, with a measly $5 billion.
Because Ethereum is still a work in progress and continues to evolve to meet the needs of its users, it's likely that any other blockchain looking to outdo Ethereum faces an increasingly difficult task. With each new upgrade, Ethereum will only become more useful and get one step closer to its ultimate vision of supporting the world.
It's this combination of proven dominance and a clear vision for the future that makes Ethereum unlike any other cryptocurrency today. Should it reach its ultimate goal of "supporting a digital future on a global scale," it could treat investors for decades to come.
