Ethereum (ETH) staged a strong recovery from recent losses on Monday, tracking broader gain in crypto markets.
The world’s second-largest cryptocurrency jumped 7% to trade above $1,900 for the first time since sinking to a 14-month low last week. A bulk of this crash came after a bug in the ETH Beacon chain raised concerns over the stability of a full switch to proof-of-stake.
But more recent data shows that despite doubts through last week, staking and DeFi interest in ETH has remained resilient. This is also factoring into ETH’s price action, with traders hoping that its switch to PoS- ETH 2.0- can support DeFi after the Terra crash.
ETH staking grows ahead of the merge
On-chain data showed that as of Monday, the number of addresses depositing on ETH 2.0 reached 12.7 million- with roughly 10.7% of ETH’s total supply now in ETH 2.0.
This shows that despite the recent glitch, investors are still bullish on the merge. The move is expected to make the blockchain substantially more accessible traders by reducing its energy and computing requirements.
The merge could happen by as soon as August 2022, founder Vitalik Buterin said last week.
Shifting to PoS could spur more institutional interest in ETH, given that it could make the token operate similarly to a debt instrument.
Can the merge help save DeFi?
Terra- once the second-largest DeFi blockchain after Ethereum, has severely impacted interest in the space since its crash.
The blockchain’s tumble wiped out roughly $80 billion from DeFi, with the space continuing to decline as investors feared more regulation.
But analysts now see ETH’s merge as a potential boost for DeFi, given that it could attract much more interest into the space.
Ethereum Merge is the only positive catalyst now for battered DeFi to thaw the crypto winter
-Kelvin Wong, Market Analyst at CMC Markets said in a tweet
Other parties, including Thailand’s oldest bank, are also betting on a DeFi recovery after the Terra crash.
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