Ether (CRYPTO: ETH), the native cryptocurrency of the Ethereum blockchain, has shed more than a third of its value this year amid the broader crypto market’s swoon. However, could it bounce back and rise more than tenfold over the next few years? Ether could originally be mined like Bitcoin (CRYPTO: BTC), but it transitioned to the more energy-efficient proof-of-stake (PoS) consensus mechanism in 2022. After that upgrade, it could no longer be mined.
However, it could be “staked” (locked up on the blockchain to earn interest-like rewards) and gained support for smart contracts — which are used to develop decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. Today, Ether’s value is mainly tied to the growth of its developer ecosystem rather than its token’s scarcity. It has a circulating supply of 121 million tokens, and doesn’t have a fixed supply limit like Bitcoin. Its main Layer 1 (L1) blockchain isn’t as fast as newer PoS blockchains like Solana (CRYPTO: SOL), but its Layer 2 (L2) rollups — which bundle together multiple transactions and process them off-chain at higher speeds — are helping it close that gap.
Ethereum hosted nearly 32,000 active developers as of last September, making it the world’s largest developer-oriented blockchain. The bulls expect that support to drive Ether’s price higher as the token is integrated into more Ethereum-based decentralized finance (DeFi) apps. Ether is already the world’s second-most-valuable cryptocurrency, with a market cap of $233 billion. Yet it’s still tiny compared to Bitcoin, which is worth $1.31 trillion.
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