As Ethereum reached a significant milestone with the new network launch, one crypto enthusiast is wondering about the implications that it contains. According to Messari researcher Ryan Watkins, Ethereum 2.0 brings a complete revision of what ETH is and what it offers. For Watkins, a combination of three aspects of the new network will turn Ether into one of the most unique assets in the market.
Developers have officially launched Ethereum 2.0 on December 1, attracting major interest for the new Proof-of-Stake network.
After all, the long-awaited network overhaul is expected by many to turn the cryptocurrency and DeFi market completely bullish. But what does the new network bring exactly and what implications does it have for the native ETH cryptocurrency?
In a thread on Twitter, a leading researcher at Messari decided to express his opinion on the state of Ethereum. Ryan Watkins states that while ETH1 was used as a form of money, ETH2 will be used for producing passive income through staking. Moreover, he lists three aspects that will completely change what ETH represents for the wider crypto market.
In the original network, users would utilize ETH as a store of value asset by turning it into collateral for DeFi applications. Additionally, we viewed the asset as a currency.
Watkins believes that this version of ETH also possesses properties of a commodity, calling the asset digital oil. In this analogy, the researcher makes the comparison as ETH is used to pay for block space and gas fees.
EIP 1559, a proposal that should reform the Ethereum fee market, has the potential to turn ETH into this so-called block space. Seeing that the original network offers two aspects, currency, and commodity, what does Ethereum 2.0 bring?
Ethereum’s staking is similar to bonds, believes Watkins
The research conducted by Watkins led him to believe that Ethereum’s new lending feature will bring capital asset properties. While the current return rates circulate around 20%, staking profits will mature and reduce to a stable rate between 4% to 6% in the future.
In that way, we can compare the yield returns to sovereign bonds and equities. In this context, Watkins calls Ethereum the issuer who pays out its bondholders with its native currency.
As such, the community can see Ethereum as an independent state on the internet that rewards its supporters and fills its budget through the network participants. Ethereum can pay out these ‘bonds’ as long as the decentralized network keeps working. Accordingly, it is not that hard to believe that Ethereum 2.0 may become a digital economy of its own.
As a matter of fact, we can anticipate for the new network to completely reimagine what money is even inside the blockchain industry.
The Messari researcher believes that all these aspects represent a major source of demand for ETH inside Ethereum 2.0. In fact, there has been a lot of demand and activity on the 1-day old PoS network.
According to Defiant’s Camila Russo, ETH2 went live with 80% participation and a healthy blockchain network. With more than 674,000 ETH staked on the launch day, the 1st of December has marked a historic day for Ethereum.