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Is Ethereum Becoming a Financial Powerhouse of a Blockchain?

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Bitcoin, in its creation, was singly aimed to be a digital cash system. Ethereum, created to expand the possibilities of blockchain technology, was intended to be a world computer, a platform for things to run off with its innovative smart contracts.

However, as time has gone one, Bitcoin has become more gold than cash, and perhaps, Ethereum is becoming more cash than oil. If the Ethereum blockchain, and its tokens are meant to be tools for smart contracts, then this latest push to use these tokens for financial matters may be changing its face.

There has been a rise in decentralized finance (DeFi) applications on Ethereum which have also helped push this new narrative, but data provided by Longhash, is also showing that the applications that are using Ethereum, with their own ERC-20 tokens, are starting to be more prevalent than the ETH tokens themselves. 

This could point towards these increased financial platform’s tokens being traded and used with high liquidity which is leading to Ethereum becoming a blockchain for cash. One evidential aspect of this is the launching of popular stablecoins on the blockchain.

Over the past few months, Tether has become the most popular non-native token transacted on the Ethereum blockchain. USDT previously accounted for roughly 5 percent of daily Bitcoin transactions, but an increasing number of USDT transfers are now taking place on Ethereum rather than the Omni protocol, which is built on top of the Bitcoin blockchain.

Ethereum has also seen some other major stablecoin launches over the last few years. Circle and Coinbase launched their USDC stablecoin, Gemini launched GUSD, TrustToken launched TUSD, and Paxos launched PAX, just to name a few.

These table coins are having a significant impact on what Ethereum’s main use is as, according to Coin Metrics, the Ethereum network processed 271,805 ETH transfers and 178,046 USDT transfers on September 9. In terms of on-chain adjusted transaction volume, USDT is already nearly doubling ETH’s numbers.

It is an interesting swing in the direction of Ethereum and its primary use case as it still remains a well established blockchain platform, but perhaps, the direction of cryptocurrency is driving its users towards financial offerings.

With Bitcoin having already sealed the market in terms of an investable, gold-like, asset, there is a need for alternative digital cash-like systems to enter the market. Part of this is the emergence of Stablecoins, and as they continue to grow and thrive on Ethereum, it s role remains, but its appearance seems to be shifting.

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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