Ether no longer dominates the assets on its own blockchain. Users now hold 51% of their Ethereum deposits in ether, while ERC-20 tokens worth $25.6 billion account for the remaining 49%. Ryan Selkis,
Ether no longer dominates the assets on its own blockchain. Users now hold 51% of their Ethereum deposits in ether, while ERC-20 tokens worth $25.6 billion account for the remaining 49%.
Ryan Selkis, CEO of crypto analytics firm Messari, flagged this shift as historic. "Ether now only accounts for 51% of the value secured on the Ethereum blockchain, which is the smallest amount on a percentage basis that it's accounted for in its history," Selkis said. "The other 49% of the value stored on Ethereum now incentivizes economic activity beyond the maintenance and execution of the Ethereum blockchain."
This shift stems from explosive growth in certain ERC-20 tokens. ERC-20 is a technical standard that allows tokens to operate on Ethereum while maintaining interoperability across applications. Compound released COMP, a governance token for its lending platform. The price soared from $80 to $350 as users rushed to deposit assets, a 365% gain. LINK, the token backing oracle service Chainlink, jumped 370% as developers building DeFi applications needed the service to power their smart contracts. Crypto.com's CRO token ballooned from $426 million to $2.6 billion in value.
These tokens fuel the decentralized finance boom. DeFi protocols use smart contracts on Ethereum to function as banks and trading venues without middlemen. Users deposit their crypto to earn returns or trade against each other, sidestepping traditional institutions that remain out of reach for many due to geography or regulation.
ERC-20 tokens serve dual purposes. They act as investment vehicles and operational infrastructure. They incentivize users to stake capital in new protocols, while granting holders voting rights over future development.
Not everyone welcomes the trend. The COMP token's meteoric rise invited skepticism. Cointelegraph speculated the surge might be "an elaborate pump-and-dump scheme by Chainlink." No evidence supported the claim. COMP has since fallen from its peak, now trading at half its all-time high as of late July. Some observers view the broader DeFi boom as a bubble waiting to burst. History will show what endures.
