coincodex.com
Key highlights:
- ETH reached a market capitalization of $500 billion as it posted a new ATH at $4,350
- ETH market cap is now larger than Visa and JPMorgan Chase
- Despite the positive ETH price action, users of Ethereum are having to deal with exorbitant transaction costs
Ethereum reaches $500B market cap
Ethereum reached a market capitalization of $500 billion for the first time in its history as ETH registered a new all-time high at around the $4,350 price level. ETH roughly doubled in price in the last month, and the cryptocurrency is up nearly 2,000% in the last year.
To get a better context of what a $500 billion market capitalization means, we can point out that Ethereum currently has a market cap of companies like Visa, JPMorgan Chase and Samsung.
We can also compare Ethereum’s current valuation versus Bitcoin’s historic market cap to highlight the scale of the current bull run in the cryptocurrency market – for example, Bitcoin’s market cap at the peak of its 2017 bull run was about $285 billion, and Bitcoin only surpassed the $500 billion mark for the first time in December 2020.
Even though there is certainly a lot of enthusiasm and "froth" surrounding cryptocurrency at the moment, some analysts say Ethereum still has room to grow before a substantial price correction. Popular crypto market analyst Kevin Svenson says that a $20,000 price target is not out of the question if Ethereum were to sustain its current momentum.
Ethereum transaction costs reach unprecedented levels
While ETH speculators will certainly be extatic about the price action, people who want to actually use the Ethereum network are in a bit of a tough spot. The demand for transacting on Ethereum is massive, which is translating into sky-high transaction costs, and the proliferation of new "meme tokens" like SHIB on the network is only exacerbating the problem. According to BitInfoCharts, users are currently paying an average of $65.5 per Ethereum transaction.
The Ethereum community is banking on Layer 2 scaling solutions which process transactions off-chain while still ultimately leveraging the Ethereum blockchain for security. Hayden Adams, the inventor of Uniswap, highlighted the importance of Layer 2 solutions by pointing out that Uniswap users spent $42 million on gas fees within a 24-hour window.
How badly do we need Etheruem L2s?
— Hayden Adams ? (@haydenzadams) May 12, 2021
Today @Uniswap users ALONE spent ~$42m on Ethereum gas fees.
This is almost 5x what was spent on Bitcoin network fees during the same period https://t.co/8nL6P8gRkq
Some Layer 2 solutions like Loopring are already fully operational, while others like Optimism are still being rolled out. Uniswap intends to launch a version of its protocol on Optimism once the platform is ready.
There’s of course also Ethereum 2.0, which will move Ethereum over to a Proof-of-Stake consensus model and will also bring much better scalability thanks to sharding.