The Year in Ethereum 2019

Up and to the right
  • It’s on Ethereum where decentralized exchanges are solving the problem of trusted third parties, by letting users trade without ever giving up their private keys
  • It’s on Ethereum where smart wallets are solving intractable UX challenges, without requiring users give up control over their funds
  • It’s on Ethereum where stablecoins like Dai are solving the volatility problems that have made other cryptocurrencies poor payments technology. On Ethereum, peer to peer digital cash isn’t a dream, it’s real — go use it!
  1. The Ethereum Economy continued to grow. DeFi remains the largest sector within Ethereum, and we saw early signs of growth in gaming & decentralized autonomous organizations (DAOs).
  2. Ethereum nudged into the mainstream. Major corporations, financial institutions, consumer brands, and even celebrities began actually using Ethereum.
  3. Ethereum 1.0 improved. A number of projects led to major performance improvements, and a direction was chosen for long-term sustainability.
  4. Eth2 made progress as an engineering project, and laid the foundation for launching in early 2020.
  5. Layer 2 made steady progress, with new tech capturing the community’s attention. Rollups and Zero Knowledge technology made the largest strides this year, while other technologies like state channels made steady progress.

1. The Ethereum Economy Grows

In this year’s review, we want to put Ethereum’s adoption into context of the rest of the cryptocurrency industry.

Source: Coinmetrics

💰 The Year of Decentralized Finance (Again)

In 2019, Decentralized Finance (DeFi) remained the most significant ecosystem within the Ethereum economy.

📈 How much did DeFi grow in 2019?

The simplest metric used to track DeFi’s growth is the total value of assets “locked” (TVL) in Ethereum’s DeFi ecosystem. In other words, how much money is currently stored in the smart-contracts that serve as infrastructure for this financial system?

source: Concourse Open, DeFi Pulse
Source: Alethio (01–01–2019 data)
Source: Alethio (12–15–2019 data)

🌐 Decentralized Exchanges grow in variety and volume

Decentralized Exchanges (DEXs) are an alternative to centralized cryptocurrency exchanges. DEXs let you trade your assets over the internet without requiring a centralized intermediary like Coinbase, Binance, or Quadriga.

Source: DeFi Pulse
  • Beyond Uniswap, DEXs on Ethereum had an impressive year. Total trading on DEX’s built on Ethereum passed $2.3 billion.
  • Kyber, one of the largest decentralized exchanges, grew its volume 443% from $70 million to $380 million.
  • 0x ended the year with $254 million in volume, and the number of trades increased 27% — a year of focusing on liquidity and R&D.
  • We saw the rise of DEX aggregators like Totle, and These are services which allow users to find the best price across DEXs.

🏦 Lending Services

One of the most significant developments in Ethereum’s DeFi ecosystem was the rapid growth of lending services.

💵 Stablecoins

Stablecoins fulfill the original vision of cryptocurrency as “peer to peer digital cash” — a useful means of making cheap, fast payments over the internet. A digital dollar you can use to make payments, receive your salary, and that won’t lose its value overnight in the volatile cryptocurrency markets.

Tether on Omni (Dark green) and Tether on Ethereum (Light green) — Source: Coinmetrics

💥 A Cambrian explosion of Ethereum-based assets

One major new trend in DeFi is the expansion of products and protocols that facilitate the use of synthetic assets. By “synthetic asset” we simply mean an asset that is designed to have specific characteristics, often imitating the profile of other assets.

  • Efforts to make Bitcoin useable on Ethereum gained momentum. Kyber, Bitgo, and Republic launched wBTC, an ERC-20 backed by real Bitcoin, stored with trusted custodians. In August, Keep & Summa announced their plans for “trustless BTC” (tBTC), which required no central counterparty to custody the BTC. Launched is planned for 2020.
  • RealT tokenized the legal ownership of several houses in Detroit — starting with 9932 Marlowe. Owners of these tokens have access to liquidity through Uniswap, where they can always find a counterparty to buy out their stake in the home.
  • Compound — already mentioned above in the lending section — launched cDai, a token that accrues interest. Products like cDai are collapsing the distinction between a “lending service you use” and “an asset you buy”.
  • Many synthetic assets depend on some kind of Oracle to report information. “Trustless” oracles are unsolved, and remain one of the hard problems in the cryptocurrency space.

👾 Ethereum’s gaming sector grows

In 2019, Ethereum’s gaming ecosystem showed early signs of growth.

Source: Coinmetrics

👹 Decentralized Autonomous Organizations

Since the early days of Ethereum, people have dreamed of creating Decentralized Autonomous Organizations, or DAOs.

2. Ethereum nudges into the mainstream

In September, NBA player Spencer Dinwiddie announced plans to “tokenize” his contract. He would sell 90 Ethereum-based tokens, which would give the holder a portion of Spencer’s future contract value, plus interest. In exchange, he would receive $13.5 million out of his $34 million contract up-front.

3. Ethereum 1.0 performance & sustainability

Every application we covered above — from the hundreds of millions of dollars in DeFi protocols, to trading cards, to enterprise applications — runs on today’s Ethereum protocol and today’s Ethereum clients.

🏆 Geth

Geth, Ethereum’s dominant client, received major upgrades this year. In July the Geth team released v1.9.0, which included major performance improvements and many new features. This year, the Geth team reduced the time to fast-sync a full node by half to ~ 4 hours, and implemented a 10x reduction in disk IO.

⚙️ ETH 1.X

At Devcon4 in November 2018, a group of core developers began to talk informally about how to make Ethereum 1.0 more performant in state size, sync times, and disk IO. While the long-term goal is a migration to Eth2, Ethereum must remain sustainable until that time.

Source: Etherscan
Source: Eric Conner

4. Eth2 is (almost) here.

Ethereum’s vision has always been a scalable, proof-of-stake blockchain. It has been clear since the early days of cryptocurrency that despite being a technological leap forward, proof of work is deeply flawed.

5. Layer 2 and off-chain tech

The idea behind all Layer 2 technology is that we can perform expensive computation “off chain”, while still retaining Ethereum’s characteristic security guarantees. This “second layer” can process transactions or computation much faster than Ethereum mainchain, leading to a more scalable network overall.

What did it all mean?

This post isn’t comprehensive. How could it be? There’s too much happening on Ethereum to keep track of, even when you write a weekly newsletter about it.



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