Ethereum is basking in one of those special limelight moments that are exceptionally interesting during the development of some of the most cleverly designed cryptocurrencies.
Quite often, during times when a specific interest is being shown toward a particular cryptocurrency asset, those with large amounts tend to accumulate more, as the potential for greater dominance in the future become clearer.
That is certainly the case for Ethereum these days, especially in the advent of Ethereum 2, and alongside the development of L2-based technology which leverages Ethereum’s technological genius.
This week, it became clear that Ethereum ‘whales’ – a term to define investors who hold a large number of digital assets, which in the case of Ethereum would be classified a person or organization (a single address) with around 1,000 Ethereum or more – has reached its highest point in five years according to research by Santiment, a company that conducts research in blockchain analytics.
This demonstrates that the largest wallets are accumulating Ethereum at a high enough rate to drive up the average amount held by whales by a massive margin, with the 10 largest Ethereum whales now holding $48 billion worth of Ethereum between them.
That amounts to 21.3 million Ethereum, and is clearly a spike worthy of note.
Interestingly, Bitcoin whales are still accumulating Bitcoin at a rapid rate despite its fall in value recently, with whales that hold between 100 and 10,000 Bitcoin having continued to accumulate Bitcoin since the Elon Musk-driven flash crash in May. These whales have accumulated another 130,000 Bitcoin between them since May, but perhaps more interestingly, 40,000 of that has been accumulated in the past 10 days.
Back to Ethereum. Perhaps one of the drivers behind the interest in rapid accumulation by whales recently is the technological advancements that Ethereum is benefiting from, as well as the focus on its smart contract capability.
Ethereum by its very nature is a highly versatile cryptocurrency and has the potential to fulfil far more possibilities than purely as a decentralized currency.
Such contracts are part of Ethereum’s appeal, and have been part of the reason why investment bank Goldman Sachs has gone into the Ethereum trading business. Smart Contracts are a collection of code and data which resides at a specific address on the Ethereum blockchain system and can define rules, like a regular contract, and automatically enforce them via the code.
Whether a recent move by Bitcoin’s developers was an attempt at rivalry or an assimilation with Ethereum’s potential and existing smart contract market ideology, the forthcoming release of Bitcoin, which was approved over just a few weeks ago by Bitcoin miners globally and began its foray into the market under the name Taproot, will unlock the potential of smart contracts.
The launch of Taproot, which will include substantial upgrades to Bitcoin’s core technology and is scheduled to be released in November this year, with the intention of ensuring a critical increase in functionality and aim it firmly at the market which favors Ethereum for its smart contract capability, potentially saving private individuals and corporations from expensive charges when making transactions by eliminating corresponding services and middlemen.
This, plus the Uniswap v3 L2 deployment on Optimism which is imminent is perhaps a subject of excitement for Ethereum enthusiasts, bearing in mind the Uniswap v3 introduces:
Under that upgrade, v3 will provide concentrated liquidity, giving individual liquidity providers granular control over what price ranges their capital is allocated to. Individual positions are aggregated together into a single pool, forming one combined curve for users to trade against.
It will also introduce multiple fee tiers , allowing liquidity providers to be appropriately compensated for taking on varying degrees of risk, features which make Uniswap v3 the most flexible and efficient AMM ever designed.
A particular point of interest is that it can provide liquidity with up to 4000 times capital efficiency relative to Uniswap v2, earning higher returns on capital, and its capital efficiency paves the way for low-slippage trade execution that can surpass both centralized exchanges and stablecoin-focused AMMs.
Given that this is an intrinsic part of the incredibly empowering and sophisticated DeFi world, it would require a decentralized approach unless a user has access to a L2 via a fiat on-ramp such as CoinMetro.
Therefore, when looking at the versatility in all areas of decentralized finance of Ethereum, perhaps it is possible to draw a correlation between the whales standing at a 5 year high point in terms of Ethereum accumulation, and the recent developments in capabilities which are set to be an intrinsic part of the future of financial services in all areas from contracts to decentralized liquidity.
That bodes very well indeed, as it shows that the ‘smart money’ is in the hands of those who believe strongly in a comprehensive, decentralized future for all areas of conducting business.