According to recent metrics, loans issued on Ethereum have been on the rise all year. Many are speculating that this is in anticipation of Ethereum’s transition to proof-of-stake in 2020.
Decentralized finance (DeFi) is the new buzzword in the cryptocurrency world, and Ethereum is leading the pack. Although the leading smart contract platform still has much work ahead of itself before ETH 2.0, we have already seen an uptick in demand on the network.
Outstanding Debts on Ethereum Spike in 2019
Recently shared statistics by DeFi Pulse (@defipulse) shows that outstanding debts on ETH have exploded this year. Whereas they were previously non-existent in 2017, they have since risen drastically—almost $3M in ETH-based loans are currently represented on Ethereum as debts.
— DeFi Pulse 🍇 (@defipulse) November 12, 2019
Many are speculating that this is just the beginning and that the number will increase substantially as we get close to phase 0 of Ethereum 2.0. In short, we are currently amidst a ‘rush’ to accumulate 32 ETH—the minimum amount needed to stake ETH on the network for returns.
This chart is going to explode once phase 0 is live Q1 2020.
— ultraviol.eth (@Freddmannen) November 12, 2019
DeFi Is the New Crypto-Obsession
Decentralized finance (DeFi) has become one of the main discussion points in the industry this year, with many seeing it as a means of adoption.
As of now, Ethereum remains the leading smart contract platform for DeFi. However, other platforms have started to catch on with competitors like Harmony (ONE) including DeFi as a core business model. We will likely see more Ethereum competitors jump on the DeFi hype as the ecosystem further matures. Yet, for now, Ethereum remains king in the DeFi world.
DeFi, however, still has some regulatory hurdles to overcome before it is easily accessible to everyday investors. Although Ethereum has been cleared in the United States, its many tokens and dApps are still in legal limbo. For now, Ethereum is primarily focused on scaling itself in the hopes of providing the right structure for DeFi—however, the real uphill battle may be the regulatory concerns that will come after ETH 2.0 comes out.
Images courtesy of Shutterstock, Twitter.
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