Why is 2022 going to be the perfect year for Ethereum?

2021 was one of the most exciting years for the cryptocurrency community. Several projects recorded new all-time highs, with Ethereum leading the altcoins. However, there were several ups and downs in most altcoin projects as well as DeFi. Ethereum, being the umbrella housing them all, also had several drawbacks. As we approach 2022, most crypto analysts believe that this year has some important updates coming up on the Ethereum network.

First, note that 2022 is a year going to be filled with various ups and downs. But Ethereum and DeFi are most likely to scale through them all. This is because almost all upgrades happening in the blockchain technology space are happening in the Ethereum network. There are, however, some significant trends that are going to be responsible for this growth

Three trends that would be responsible for Ethereum’s growth in 2022

As mentioned earlier, a lot of activities would be going on in the Ethereum network, and these activities would be responsible for the Ethereum bull run this year.

Decentralized Autonomous Organizations (DAOs)

These organizations are responsible for forecasting how missions, communities, and companies are merging into a single format. Although DAOs have been around for a long while, 2022 seems to be the year where they represent a core player in building new entities. It’s also going to help develop its governance as investors would begin to get more comfortable in staking and exercising voting power and delegating it to experts on a said topic. With this being, in reality, Ethereum would see a warm welcome by several new investors, thanks to comfortability.

Decentralized finance (DeFi)

If there’s one major force behind Ethereum growth, it’s definitely DeFi. Since the birth of the DeFi ecosystem, the Ethereum blockchain has enjoyed several awareness and growth. Decentralized finance is one of the fastest-growing ecosystems in the whole crypto community, with more users coming in since there’s now a form of linkage between DeFi and mainstream finance. With the upgrades in the DeFi ecosystem, such as decentralized identity management components, the growth of DeFi is about to triple. Whatsoever happens to DeFi will indirectly affect the Ethereum ecosystem, since it’s the tree housing different branches, including DeFi. Since Ethereum’s price is still very much pocket-friendly, you might buy as much as you can now before its price skyrockets. The know your customer, and DeFi upgrade is one of the latest in the DeFi ecosystem, and work is in progress regarding how to make this possible without an iota of centralization.

Proof-of-stake

This is the Ethereum end game, and it’s one of the main reasons why the Ethereum price will move up high before the end of the year. Ethereum runs on a proof-of-work consensus, which uses a huge amount of energy compared to the PoS. With the new upgrade, the exceptionally high gas fees in the Ethereum network would become a thing of the past once Ethereum successfully launches into the PoS, finally before the end of 2022. Currently, there’s a broad shift of users from the first layer of the PoS consensus to layer two, before the end of 2022, it will be completed. By then, Ethereum will become a blockchain that can be sued for other networks for the sake of smooth interaction, birthing the multichain network. Transitioning into the PoS from the PoW consensus for Ethereum is definitely going to be a total game-changer. Faster transaction speed and lower transaction charges are some of the most important incentives to push Ethereum into the right angle if it’s ever going to compete with bitcoin on a large scale.

Several factors will be responsible for the growth of Ethereum in 2022, but the three trends mentioned above are the most important. There are more than one factors that could influence the development of a blockchain, and these factors rest on the adoption rate. However, Ethereum being a second-generation with a major upgrade coming later this year, seem to be the top crypto enjoying a bull-run this year. Thanks to DeFi and other essential players under the Ethereum network, the growth of these communities would definitely inform how well the Ethereum ecosystem would grow a few months down the line. As Ethereum has DeFi as a significant player, DeFi has NFTs (Non-fungible tokens) as its wild card. So, whatever happens in the metaverse and NFTs will affect DeFi and in turn affect Ethereum. Currently, one of the topmost invested ecosystems in the crypto community is DeFi and NFTs, putting Ethereum investors in a better position to leverage.