Victor Ugochukwu · Dec 14, 2020 . 5min read
ERC20 Tokens surpasses Ethereum in capitalization
The total market capitalization of ERC20 tokens is valued at $33 Billion compared Ethereum's $26 Billion
By Victor Ugochukwu · Jul 17, 2020 . 9min read
Following the recent stablecoins growth and DeFi boom, Ethereum-based, ERC20 tokens surpass Ethereum in market capitalization.
Coinmetrics, a crypto research data company open-sourced one of its spreadsheet tracking ERC20 tokens. This sheet shows the total market capitalization of ERC20 tokens is valued at $33,282,979,308 as of July 17, 2020.
Comparing this with Ethereum’s $26,092,222,828 market cap on the same date, ERC20 tokens are growing nicely. Looking further in the sheet, Tether, the stablecoin continues to see explosive growth in 2020 leads the pack. Tether reflects a $9 billion in valuation.
BNB, the gateway token to Binance ecosystem ranks second with close to $3 billion in market capitalization. ChainLink, Bitfinex’s LEO Token, USDC, which is another growing stablecoin and Vechain are others within the billion-dollar valuation.
Others like Maker, Compound, Aave which are DeFi tokens continue to see surging demands. Even though Ethereum network scaling problems persist, decentralized finance continues to push for increased on the network.
Past mass migration of tokens away from Ethereum to EOS, Binance and TRON didn’t hurt much as history proves
Ethereum network saw a huge exodus of most of its token into other networks like EOS and even Binance Chain. EOS, another smart contract network allows developers to program on it without having to incur transactions fees. This is what is obtainable on Ethereum presently in the name of gas fees. Binance Chain, on the other hand, focusses on helping developers build a base for issuing new cryptocurrencies and ICO tokens. One would argue this is a direct competition to Ethereum albeit a stale one. Especially true as crypto space saw the Ethereum ICO bubble of 2017.
Ethereum, the preferred blockchain for Open Finance
Looking like the new Ethereum Killer is here, history proves otherwise. Even Ethereum’s persistent scaling issue comes growth among ERC20 tokens. EOS has its problems also. Issues like transactions rollback and other network security problems are inherent with any DPoS chain. The Steem blockchain, running on DPoS consensus, was hijacked recently by Justin Sun revealing this security flaw. With security issues like this, Ethereum which prides itself as one of the most decentralized public blockchains never willing to sacrifice security for network scaling remains the preferred network for open finance.
Serenity may eventually make Ethereum more serene for ERC20 tokens and even NFTs
As ERC20 tokens continue to capture value, the challenge remains Ethereum’s network that gets clogged up easily. Although there are possible layer two – L2 solutions, many of these tokens still happen on-chain for security. Should Ethereum overcome its on-chain transactions speed issues by migrating to PoS – Eth 2.0 or Serenity, then more values would be captured by its native tokens. Moreso, Non-Fungible Tokens (NFTs) which present another strong use case of the blockchain could well surge on the network. Cryptokitties, a blockchain-based game where users get to adopt and breed virtual cats with unique identities is one of the Ethereum/NFT use cases. It exposed how weak Ethereum is in supporting fast transactions. This slowness to confirm and add transactions to a block make it unappealing for enterprise transactions speed like Visa and others.
From fat to thin protocol
Compound DeFi protocol was reported to have up to $1.5 billion of the locked loan value and with the WBTC’s recent introduction into it, it’s touted to capture even more value. Even as Ethereum continues to support DeFi and a possible NFT boom in the future, more of the applications built on top of Ethereum should capture more value even more than the base layer protocol. These should mean that the applications built on the Ethereum protocol layer become fat while the protocol supporting them shrinks.