Ethereum (ETH)

What gives Ether value?
Ether, the native currency of the Ethereum network, derives its value from a myriad of different factors. It is used within the Ethereum network to perform a range of functions, including:

                  • used to pay Ethereum transaction fees (in the form of ‘gas’)
                  • used as collateral for a wide range of open finance applications (MakerDAO, Compound)
                    can be lent or borrowed (Dharma)
                  • accepted as payment at certain retailers and service providers
                  • used to as a medium of exchange to purchase Ethereum-based tokens (via ICOs or exchanges), crypto-collectibles, in-game items, and other non-fungible tokens (NFTs)
                  • earned as a reward for completing bounties (Gitcoin, Bounties Network)

Furthermore, in Ethereum 2.0 (Serenity), users will be able to become a validator and help secure the network by providing computational resources and locking up 32 Ether per validator. Due to this, it is expected that Proof of Stake will lock a substantial amount of the circulating supply of Ether. There are also discussions around introducing a ‘fee-burn’ model where a percentage of Ether used to pay transaction fees would be ‘burned’ and thus reduce the circulating supply of Ether.
In addition to utility value, Ether also has speculative value. This is value that is derived from speculative activities (such as trading and investing) which currently accounts for most of the value behind all crypto-assets. As observed in 2017, crypto-assets can attract substantial speculative interest, with some assets increasing in value by 1000x over just a few months. This speculative interest often brings fresh capital into the ecosystem that can be reinvested into various verticals, but it can be damaging to the short-term market sentiment of all crypto-assets.

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