Ethereum Blockchain Hits New Momentum: ERC-20 and its Market Capitalization

• Vikash Kumar Das
• October 07, 2020

Wondering what are ERC-20 tokens? What are the benefits of using such tokens? How is the market capitalization of these tokens gaining momentum? What about the market cap of Ethereum itself? Well, this article has got you covered. 

So let’s get started!

 

Table of Contents

 

• What is ERC-20?
• Benefits of Using ERC-20 Tokens 
• Market Capitalization: ERC-20 Vs. Ethereum
• Concluding Lines 

 

What is ERC-20?

 

One of the popular Cryptocurrency and Blockchain, Ethereum, is based on the concept of tokens, which can be bought, sold, or traded. It is a standard which monitors the creation of Token based on Ethereum Blockchain. These tokens have similar functionality to other coins developed on different Blockchain such as Bitcoin, Ether, and Bitcoin Cash.ERC-20 stands for Ethereum Request for Comments and 20 denotes proposal identifier.

ERC-20 acts as a technical standard, as most of the  tokens follow this standard for the development of tokens using smart contracts. In comparison to other cryptocurrencies, ERC20 tokens are hosted on the Ethereum blockchain and are stored and sent using ethereum addresses, whereas other cryptocurrencies like Bitcoin and Bitcoin Cash are the native currencies of their respective blockchains.

In most simple words, ERC-20 is a protocol for introducing enhancements to the Ethereum network.

 

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Benefits of Using ERC-20 Tokens 

 

The ERC-20 token helps developers of all kinds to reliably predict how new tokens in the wider Ethereum framework will operate. This simplifies the task set out for developers; they can continue knowing that any new project will not have to be redone each time a new token is issued, as long as the Token follows the rules.

 

ERC20 regulations define a well-defined blueprint for developers to learn. Thus, instead of working from scratch, it becomes convenient for developers to come up with tokens.

 

There are various digital currencies that are issued as an ERC-20 token. All you need is a wallet that is compatible with these tokens. Since such tokens are well-recognized, there are several options for wallets as well. There are a number of popular digital currencies that use the ERC-20 standard, such as Maker, Basic Attention Token, Augur, etc.  

 

The liquidity of these ERC20 tokens is an essential factor for the overall valuation of the Ethereum network. If the projects on top of Ethereum Blockchain are active and interact with each other, more projects and users can constantly use the network of Ethereum.

 

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Market Capitalization: ERC-20 Vs. Ethereum

 

According to the latest news, Ethereum’s economy hits new milestones in transfer value and ERC-20 market cap as compared to Ethereum. 

 

A platform Santiment that helps in exploring behavioral analytics for the crypto market found that the market cap for all ERC-20 based tokens has flipped even that of Ethereum Blockchain itself. In September 2020, the Ethereum Foundation announced that teams working on the Ethereum blockchain would be awarded over $3.8 million in grants.

 

As of September 11, 2020, the total market cap for all current ERC-20 assets was $46.7 billion, whereas that for Ethereum was just over $41 billion.

 

Santiment platform mentioned that since Black Thursday, the ERC-20 market capitalization had flipped the Ethereum itself. ERC-20 tokens after first crossing in mid-march again showed the rise on September 3. It was reported that “this is the highest market cap differential of ERC-20 coins over $ETH.”

 

According to the Tether Transparency Survey, Tether estimates for a notable share of the ERC-20 capitalization, with around $8.9 billion, or 60% of the entire USDT supply, currently on the Ethereum Blockchain network.

 

CoinMetrics analytics reported that the 7-day average adjusted transfer value of ETH hit $3.08B on September 5, compared with $3.01B for BTC.

 

Concluding Lines

 

From the above discussion, it is clear that Ethereum’s economic metrics are strengthening in terms of the transfer value and ERC-20 market capitalization. The spike in the Ethereum ecosystem is because of several reasons. Yearn Finance’s yETH vault is one of the potential factors for passive earning opportunities for Ethereum holders. Please note that Yearn.finance is a yield aggregating platform built on Ethereum Blockchain that utilizes decentralized finance protocols such as Compound, Aave, and others for optimizing token lending. In addition to this, SushiSwap, a completely decentralized on-chain token exchange protocol, is responsible for increasing both the value of Ethereum transfer and its network fees.

 

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