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No, Ethereum 2.0 will not be released on December 1

Ethereum (ETH) fans are celebrating the setting of the genesis block 2.0 date, scheduled for December 1st. At first glance, it seems like a great achievement, but not quite the story.

The journey began in late 2018, when a new roadmap was released to start a network with validators, in the Proof of Stake system, in addition to the additional layers (shards), significantly increasing the computational capacity.

However, there are no plans for the new network to enable the launch of decentralised applications and smart contracts. In fact, at this first moment it is not possible to carry out any movements within the 2.0 network.

How is the demand in DeFi?

Decentralized finance (DeFi) peaked between August and September with the launch of several tokens. The main segments were collateralized loans, decentralized exchanges, and liquidity pools.

The magic of high profitability was in the value of these tokens, which were distributed to participants and investors in these projects. While Uniswap (UNI), UMA, Compound (COMP) and Yearn Finance (YFI) were all valued, everything was a wonder.

Uni / Theter
Uni / Theter

When the tide turned at the end of October, investors began to understand that most of the gains were based on the token appreciation. It was then that the universe of DeFi came to know the term „impermanent loss,“ or loss caused by imbalance.

Although traditional market analysts had pointed to this risk long before, the DeFi boom left investors blind. This led to congestion in the Ethereum network, raising the average rate per transaction to a peak of $8.

The disappointment was so great that in October the number of transactions in the Bitcoin Profit network plummeted by 60%. As a result, the fees have dropped to the current $0.60.

Above is the graph of the value traded on the Ethereum network in dollars, according to CoinMetrics. Most of this drop can be attributed to the lower volume in decentralized exchanges, even with the stagnation of the amount invested in DeFi.

Is DeFi dead? What is the impact for ETH?

No, the universe of decentralized finance is not dead. There was only an adjustment after the bubble formed by the strong appreciation of the tokens. However, it must be understood that the number of active wallets in the Uniswap leader, for example, hardly exceeds 40,000.

Endereços ativos na Uniswap. Fonte: DappRadar
Active addresses at Uniswap. Source: DappRadar

The main conclusion is that DeFi is only at the beginning, and Ethereum dominates over 80% of this volume. However, there is no logic in betting on valuation due to the launch of ETH 2.0, which effectively has no date to become functional.