In 2023, Ethereum (CRYPTO:ETH) has been one of the best-performing cryptos. Up 57% for the year, Ethereum now trades at a price around $1,900. Even better, Ethereum recently completed its first major technological upgrade after The Merge and seems to be well positioned for future growth.
If you are thinking about buying Ethereum now, there are two different metrics to consider. One metric will let you know how Ethereum currently stacks up against its blockchain peers, while another will let you know how Ethereum's transition into a proof-of-stake blockchain is going. Let's dive in.
Total Value Locked
The first metric to consider is Total Value Locked (TVL), which is a popular gauge of overall blockchain activity. It measures the total value of crypto assets deposited into smart contracts and decentralized finance (DeFi) protocols. The higher the number, the better.
And Ethereum does not disappoint. According to the latest data from DeFi Llama, which tracks TVL over time, Ethereum remains the dominant market leader in the blockchain space. Ethereum ranks No. 1, with almost $29 billion in TVL. The next closest competitor is Tron (CRYPTO:TRX), with just $5.4 billion in TVL. Overall, Ethereum accounts for nearly 59% of all TVL in the blockchain world. That's the sign of a true market behemoth.
Image source: Getty Images.
Even when you drill down into the TVL number, things look good. For example, DeFi Llama provides a time series of TVL data, so it's possible to see how things are going since The Merge back in September. Seven months ago, Ethereum had a 56% share of blockchain TVL, so its market share percentage has actually slightly increased since then. This is a good sign that Ethereum has not slowed down at all since The Merge.
Staking market cap
The next metric to consider is staking market cap, which measures how much of a particular crypto has been staked. For Ethereum, this is an important consideration because The Merge was all about transitioning from a proof-of-work blockchain into a proof-of-stake blockchain. By analyzing the staking market cap, as well as other peripheral metrics related to staking, it's possible to gauge how well this transition is going.
The staking market cap for Ethereum right now is $34.3 billion, which ranks No. 1 among all blockchains, and it's not even close. The next closest competitor is Cardano (CRYPTO:ADA), with $9.4 billion. The only drawback here is that the staking ratio, which compares staking market cap to overall market cap, remains relatively low for Ethereum, at just 14.9%. Cardano, by way of comparison, has a staking ratio of 65%.
However, I'm willing to cut Ethereum a break on this for two reasons. One, staking has only officially existed on Ethereum since September, when The Merge took place. Other blockchains have had staking in place for years. Cardano, for example, has had staking since 2017. Secondly, the whole point of Ethereum's new upgrade in March was to make staking more attractive to users by addressing a key issue left unresolved by The Merge. So nobody really expected Ethereum's staking numbers to improve dramatically until the upgrade was completed.
And, by all indications, staking has been a smashing success for Ethereum since March. As soon as the tech upgrade related to staking was completed, institutional investors were beating down the door to stake over $1 billion on Ethereum. Given Ethereum's massive new influx of staking activity, I fully expect the blockchain's staking market cap to rise in the coming months.
What do the numbers tell us?
Overall, the numbers appear to paint a positive picture for Ethereum. According to TVL, Ethereum remains the dominant Layer 1 blockchain. According to the staking market cap, Ethereum is doing an excellent job with its proof-of-stake transition. Putting it all together, it appears Ethereum hasn't skipped a beat at all after The Merge.
Thus, if you are looking for a crypto to buy and hold for the long term, look no further than Ethereum. The underlying numbers look quite enticing, and the future growth prospects are simply unmatched.
