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James Carter

March 2, 2023

Crypto Updates: Ethereum to set new records in 2023

Since the beginning of 2023, Ethereum (ETH) has done very well, thanks to a return of bullish market sentiment.

After starting the year at $1,192, ETH jumped to a 90-day high of $1,732 on February 21. This is a 45% increase from the beginning of the year (year-to-date). As of March 2, the price of ETH was $1,641, which was more than 5% less than its 90-day high.

Ethereum to set new records in 2023?

Since Coinbase announced the launch of Base, an Ethereum layer-two sidechain, things are looking up for ETH. This move shows how strong ETH’s fundamentals are, which should help it grow in the long run.

Crypto Updates: Ethereum to set new records in 2023

With Base, Coinbase wants to bring in more than a billion new users to the crypto economy. Even if it only gets a small portion of this huge number of users, the increased adoption and use will help Ethereum.

As ETH’s market factors and fundamentals continue to improve, investors wonder how this will affect its price in the coming days. Let’s look more closely and find out.

What affects the Ethereum price?

Ethereum has become the platform that developers, business owners, and investors use the most. Even though it has had a few bumps along the way, the blockchain-based digital asset has shown over and over again that it is strong and flexible.

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Ethereum has become the platform of choice for many because it can do a wide range of things, from decentralized finance (DeFi) to games and data storage.

As the project goes on, its direction will be heavily influenced by a number of important themes and questions. What will determine Ethereum’s future, from problems with scaling to how many people use it?

The upcoming Shanghai update

With the upcoming launch of the Shanghai upgrade, Ethereum is about to start a new era (EIP-4895).

After their September 2022 update, called “The Merge,” Ethereum switched from a traditional proof-of-work consensus mechanism to a proof-of-stake (PoS) one, letting users stake 32 ETH to become validators. This change caused a stir in the cryptocurrency market because users had to lock up their funds forever to become validators.

But the Shanghai upgrade will change that. Starting in March 2023, validators will be able to withdraw their funds. People who use cryptocurrencies are very interested in the upcoming fork because they want to know how this change will affect the price of ETH.

Currently, 14.84% of all ETH tokens are staked, according to Staking Rewards. The owners of these tokens can now withdraw and sell their holdings.

On the other hand, the increased liquidity of ETH staking and the ability to stake directly with Ethereum may lead to more people wanting to buy ETH. This could make the market more stable, which could cause the price of ETH to go up.

In order to get ready for the release, Ethereum developers are testing on three testnets—Zhejiang, Sepolia, and Goerli—to find and fix any bugs or glitches that might happen.

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On the Sepolia testnet, the developers just did a second dress rehearsal for the upgrade.

Ethereum to set new records in 2023

Even though Ethereum’s developers haven’t given an official release date, since it’s already March, the release may be pushed back to April.

Deployment of ERC-4337

The “account abstraction” feature of the ERC-4337 Ethereum blockchain, which was announced on March 2, could change the way online wallets recover crypto.

Etherscan data shows that the upgrade, ERC-4337, was done through the EntryPoint smart contract. This new standard basically turns wallets into smart contract accounts, which makes them easier to use and safer in case you lose your keys.

Crypto Updates: Ethereum to set new records in 2023

It was thought that this feature would take years to roll out. Still, the fact that it’s already working on Ethereum means that the long-awaited era of easy-to-use crypto is finally here.

Rising TVL levels

Total value locked is a common way to measure how well the DeFi market is doing as it grows and develops (TVL).

TVL shows how much people trust these protocols, which helps traders, investors, and developers figure out how healthy the DeFi market is.

DeFi LIama says that Ethereum’s TVL was $29.41 billion on March 2, up from $23.11 billion on January 1. This is a 27% increase. This is a big change in the way the market is going because Ethereum has been going down TVL since April 2022.

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The fact that DeFi’s TVL is going up shows that it is getting bigger and could lead to more progress in the industry. So, this rise in TVL shows that people are becoming more confident in the Ethereum network and could soon bring big benefits to the web.

Fight against scalability: proto-danksharding

The Ethereum network has always had problems with scalability, like gas fees that keep going up and other things that make life hard for users.

As more people use the network, its problems with scalability get worse, and the complexity of maximum extractable value (M.E.V. ), which lets validators make more money, makes things even worse.

With sharding, these problems can be fixed. Sharding is the process of breaking a blockchain into smaller pieces called “shards.” This has been seen as a possible way to solve the scaling problems that blockchain networks are having right now.

Danksharding, which focuses on rollups, has been getting a lot of attention lately as a possible solution to Ethereum’s scaling problems. But it’s not ready to be used yet because the Ethereum network isn’t ready for a design like this.

In response, EIP-4844, also known as “proto-danksharding,” has been proposed. Its goal is to implement the basics of danksharding while laying the groundwork for its full implementation.

Adding a new type of transaction called “blob-carrying transactions” is a key part of this. These blobs can hold up to 1 MB of data, which makes it easier for both validators and clients to use their bandwidth.

Even though proto-danksharding doesn’t do much to improve the scalability of the Ethereum network, it is still an important first step in fixing this problem.