As Ethereum turns five years old, Ether is up 50% over the past month with two main catalysts driving the uptrend, namely DeFi and ETH 2.0.
The price of Ethereum’s Ether token has seen strong momentum in July. Since the start of the month, ETH has climbed by 50% from $225.5 to $340 on Coinbase. It coincides with a five-year anniversary for the dominant smart contracts blockchain protocol.
There appear to be two key factors fueling the rally of ETH. First, the anticipation of the market towards ETH 2.0 has been continuously building. Second, the explosive growth of the decentralized finance (DeFi) market has upheld the momentum of Ethereum.
ETH/USD surges from $225.5 to $340 from July 1 to July 31. Source: TradingView.com
DeFi and its impact on the Ethereum blockchain
In mid-June, DeFi platform Compound essentially kickstarted the phenomenon called “yield farming.” Ethereum users would flock to DeFi platforms providing the highest incentives, trying to obtain the highest yield possible.
Since then, several major DeFi platforms have emerged. According to Defipulse.com, Aave, Balancer, and Curve Finance have $482 million, $291 million, and $263 million locked in, respectively.
Consequently, the total value locked in the DeFi space has increased to $3.94 billion. It is up by more than three-fold since the beginning of June.
The upward trajectory of the DeFi market could positively affect Ethereum for various reasons. The most