With the recent plunge in the cryptocurrency market, there has been a continuous increase in ETH holdings by whales. According to on-chain analyst Yu Jin’s statistics, the market value of ETH purchased by suspected addresses linked to Justin Sun since April has reached around $500 million. In addition to Sun, other institutions or whales have also been accumulating ETH, and recently, the price of ETH has shown a rebound.
So, what is the main logic behind these whale accumulations? Or, in other words, what are the main positive factors for the Ethereum ecosystem this year? In this article, let’s take a look at the main positive factors for the Ethereum ecosystem.
1. Spot Ethereum ETFs
According to Bloomberg’s compilation, there are three final deadlines for spot Ethereum ETFs in May.
The earliest ones are VanEck and ARK 21Shares, with final deadlines on May 23rd and 24th respectively. This means that the SEC needs to make a clear response of approval or rejection before these dates.
BlackRock and Fidelity, which have relatively large fund sizes, have final deadline dates for their spot Ethereum ETF applications in early August.
Even if spot Ethereum ETFs are not approved by the SEC in May, there are still expectations for the approval of these two giants, BlackRock and Fidelity.
During the approval process of spot Bitcoin ETFs, BlackRock played a crucial role. Previously, although institutions had applied for spot Bitcoin ETFs ten years ago, they were repeatedly rejected by the SEC. However, when BlackRock started to apply for spot Bitcoin ETFs, the application was approved after only seven months. BlackRock’s successful application undoubtedly provides a strong reference for the approval of spot Ethereum ETFs.
Therefore, we have reason to believe that spot Ethereum ETFs will eventually be approved by the SEC; it’s just a matter of time.
In addition, there is good news from Hong Kong, which is friendly to the Web3 industry.
On April 29th, the Hong Kong market witnessed a historic moment with the launch of Bitcoin spot ETFs and Ethereum spot ETFs!
The Hong Kong Securities and Futures Commission approved the issuance of six virtual asset spot currency ETFs under Huaxia Hong Kong, Bosera International, and CSOP International. They were first issued on April 29th and officially listed on the Hong Kong Stock Exchange on April 30th.
Although the fund size of virtual asset ETFs in Hong Kong cannot be compared to that in the United States, this is a long-term positive factor. Hong Kong investors will be able to indirectly invest in Ethereum in the securities market, which will bring more users and funds to Ethereum.
Virtual asset ETFs are a major trend, and led by the United States, more countries and regions will approve spot Bitcoin/Ethereum ETF funds, bringing more users and capital to Bitcoin/Ethereum in the long run.
2. Ethereum Prague Upgrade
In addition to spot Ethereum ETFs, the Prague upgrade is another major focus of the Ethereum ecosystem.
There are many proposals involved in the Prague upgrade, and we will introduce one of the more influential proposals, EIP-3074.
On April 12th, during the 183rd Ethereum All Core Developers’ Meeting, EIP-3074 was formally included in the Ethereum Prague upgrade.
Essentially, EIP-3074 delegates control of Externally Owned Accounts (EOA), which are the addresses we normally use, to smart contracts. This includes the ability to approve single transactions, batch transactions, wallet asset recovery, and sponsored transactions.
In other words, after the completion of the EIP-3074 proposal, the Ethereum addresses (EOA) we usually use will also have the functions of smart contracts, providing more flexibility in operations. What specific functions are there?
Firstly, after the proposal is completed, DApp developers can pay for users’ gas fees.
As we all know, when we transfer on the Ethereum network, if the account does not have enough ETH to cover the gas fees, the transaction will be rejected. However, after the completion of EIP-3074, DApp developers can pay for users’ gas fees, reducing the user’s threshold for use. This will attract more users and promote the mass adoption of blockchain technology.
Secondly, when trading a new token on DEX platforms like Uniswap, we usually need to authorize it before being able to trade. After the completion of EIP-3074, these two operations will be combined into one transaction.
A third practical feature is the implementation of an asset recovery mechanism. With the introduction of EIP-3074, users can set a special caller contract, which allows asset recovery through verified social media accounts in case of accidental loss of private keys. This greatly reduces the difficulty and threshold of private key management, providing users with more convenient and secure asset protection measures.
In the Web2 world, social platforms like QQ and WeChat have long provided similar password recovery functions, allowing users to quickly regain access to their accounts when they forget their passwords. With the deployment of EIP-3074, this concept is successfully introduced into the field of encrypted assets, effectively reducing the risk of asset loss due to improper private key management.
The Prague upgrade is expected to be tested on the testnet in the second half of the year and is expected to be successfully deployed on the mainnet before the end of the year. However, considering the recent deviation between the Ethereum upgrade progress and the expected completion time, the specific completion time of the upgrade still needs to be determined based on Ethereum’s development progress.
3. Grayscale Report: Ethereum is the Best Choice for Future Global Asset Tokenization
RWA is one of the hottest tracks at present, and BlackRock’s entry has injected new vitality into this track. In this track, Ethereum has performed particularly well, with a market share far ahead of other public chains.
Recently, Grayscale Research released a report stating that although the modern financial system is already quite efficient, tokenization itself may not immediately bring significant efficiency improvements. On the contrary, the main advantage of tokenization lies in the ability to integrate users, assets, and applications into a unified global platform.
From the perspective of the cryptocurrency market, although many assets may benefit from the trend of tokenization, the assets with the most development potential are likely to be those that can provide a universal global platform protocol. Currently, Grayscale Research believes that the Ethereum blockchain is most likely to achieve this goal in the future.
Security is undoubtedly the most crucial factor in the RWA and DeFi fields. Among many public chains, Ethereum is highly recognized by users for its excellent security performance, which is the main reason why it occupies an important position in the RWA track. With the continuous development of the RWA track, this will undoubtedly benefit the Ethereum ecosystem.
In summary, the positive factors of spot Ethereum ETFs, the Prague upgrade, and the explosion of the RWA track will inject new vitality into the development of Ethereum, further promoting the development of the Ethereum ecosystem.