As the market appears to be moving out of its bear phase — Bitcoin is finally holding above the $4,000 mark — the push for a permanent increase of the price floor depends on the usability and fundamentals. For Ethereum, that means a strong network of dapps and Ethereum-utilizing platforms. Crypto investors can take heart, as it appears that the demand for Ethereum and other digital assets is steadily growing on some platforms.
Head of Digital Currency Research at TradeBlock, John Todaro, posted a tweet showcasing the demand for Ether on platforms such as Compound Finance, and pointed towards this demand rise of Ethereum on such platforms plus a potential drop in natural supply as instigators for a price rise. TradeBlock provides institutional trading tools for cryptocurrency.
The accompanying graph shows an increase in the amount of locked Ether since November.
Over past 3 mos, demand for $ETH for collateral on DeFi platforms $MKR, @compoundfinance, etc was ~10,000 ETH each day. The new supply of ETH each day is ~19,000 ETH. The supply rate will soon be reduced to ~12,000. Natural demand for ETH will soon outstrip natural supply. pic.twitter.com/GlEXHyzAfc
— John Todaro (@JohnTodaro1) January 3, 2019
The increased demand for Ether on such platforms should not come as a great surprise, as the number of dapps and use cases for Ethereum grows. The number of decentralized applications have been growing, and increased dapp support would naturally increase the price of the token.
The general increase in buying enthusiasm is also hinted at in a report by crypto publication The Block, which showed that buying pressure on Wall Street Over-The-Counter (OTC) trading desks have increased since the start of the new year. The story also shows an increase by buyers in altcoins and stablecoins on Circle’s OTC trading desks in early 2019.
The Decentralized Finance Movement Is Strong
Compound Finance is a protocol built for the Ethereum blockchain that allows users to supply digital assets, for which they earn interest. The protocol adjusts the interest rate individually for each asset, based on the demand for the particular asset. For example, the DAI token now possesses a supply Annual Percentage Rate (APR) of 3.13%, while the demand APR is at 9.92%.
Launched in September 2018, Compound Finance says that it is on a mission to allow users to yield interest on their long-term investments. Both Compound Finance and MakerDAO are members of the DeFi movement, a consortium of various blockchain entities who are working to bring decentralized finances to the masses.
Other members of the DeFi movement include dy/dx, a decentralized protocol for margin trading and derivatives on Ethereum; Kyber Network; CDx, a protocol for tokenized credit default swaps; Coinbase with its mobile wallet; and several others.
The movement is governed by an adherence to interoperability and open source, accessibility and financial inclusion, and financial transparency.