On the EthHub weekly recap podcast yesterday I mentioned that my bet (or “investment thesis”) for ETH is mainly based on the fact that it has much more utility than any other cryptoasset (yes, including Bitcoin). ETH’s utility is also always expanding because of Ethereum’s expressive nature which allows developers to deploy new money legos on a regular basis!
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So, what can you do with your ETH? Starting simple, you can transfer your ETH to another Ethereum account then you can quickly ramp this up by trading your ETH for another token on a decentralized exchange like Uniswap. Another simple thing you can do is register an ENS name by paying in ETH which I think is a sometimes understated activity. To put this in context, you can register a human-readable name for your Ethereum address by just using ETH to pay for it. You can even anonymize your ETH by using tools like Tornado Cash!
Now we can take this to the next level and talk about using your ETH as collateral to either leverage your ETH holdings or earn some yield on stablecoins. You can do this today on multiple platforms - MakerDAO, Compound, Aave and more. You simply deposit your ETH, draw out a stablecoin, and then either buy ETH or another asset with this stablecoin or go lend that stablecoin out somewhere on Ethereum to earn 5%+ APY (depending on market conditions).
Taking this a step further again, you have the option of becoming a liquidity provider (LP) on multiple DeFi apps. Using ETH, you can become an LP on Uniswap or Balancer in many different trading pools or if you want to take your stablecoins that you just borrowed against your ETH collateral, you can put these into Curve or mStable to earn an out-sized yield. Does this sound a little too risky? Protect yourself against smart contract failure by taking out cover on Nexus Mutual!
Finally, when eth2 phase 0 goes live, you’ll be able to stake your ETH, run a validator on your PC, and earn an ETH-denominated return for your work in securing the Ethereum network. I imagine that staked positions will eventually be tokenized as well which means that you’ll be able to use your Staked-ETH (SETH?) as collateral in different DeFi projects - possibly to even borrow stablecoins and do the things above - wild right?
The best part about everything I mentioned above is that you can do it all from your own desktop or mobile wallet - no need to send your funds around to different centralized services, no need to trust any one service with all of your money, no need to ask for anyone’s permission or do KYC - your Ethereum wallet and your ETH are the gateway to an entirely new bankless financial system.
Have a great day everyone,
All information presented above is for educational purposes only and should not be taken as investment advice.
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