Miles Deutscher, a prominent cryptocurrency analyst and investor, recently shared his bullish outlook on Ethereum. Deutscher listed nine reasons why he believes Ethereum is poised for tremendous growth and innovation in the near future.
According to Deutscher, Ethereum has several advantages over other blockchain platforms, such as:
- The ability to attract the biggest and most innovative new projects such as PayPal's stablecoin and Worldcoin.
- Development and adoption of layer 2 solutions, which are protocols that run on top of Ethereum and provide faster, cheaper and more scalable transactions. Deutscher mentioned users' Base launch, a platform on tier 2, as well as zkSync, Starknet and Linea, some of the most funded and advanced tier 2 projects.
- Increased rate of ETH staking, which is the process of locking ETH and protecting the network in return for reward. Deutscher also noted the rise of LSDs, or liquid staking derivatives, which are tradable tokens representing staked ETH.
- According to the analyst, Ethereum's dominance in terms of fee revenue indicates high demand and usage for the network. Deutscher claimed that Ethereum generates more fees than all other protocols combined, which adds to its deflationary nature.
- Implementation of EIP1559, a major upgrade that changes Ethereum's fee structure and introduces a mechanism that burns some of the fees on every transaction. Deutscher said this caused ETH to become deflationary.
- Expect EIP4844, another update that is expected to reduce fees on layer 2 solutions by allowing them to aggregate multiple transactions.
- Many popular NFT projects are deployed on ETH. Deutscher mentioned some examples of NFT collections ported to Ethereum, such as degods and y00ts.
- Adoption and integration of Ethereum by other blockchain platforms such as Fantom and Frax. Deutscher said many tier 1 platforms are returning to Ethereum by adding tier 2 solutions or launching their own tier 2 versions.
- Regulatory clarity and security of ETH. Deutscher recalled that Ethereum is labeled as a commodity by the CFTC and has not been named a security in any litigation except in the case filed by the New York Attorney General.
*Not investment advice.