Equilibrium (EDX) news

Bitget Beginner's Guide — Calculation of Funding Rates in Futures Trading

Overview ● This article introduces the concept of funding rates in Bitget futures trading and explains their calculation. ● It details the differences between funding rates and transaction fees. ● Funding rates are not paid to Bitget but to other users. Funding rates are the fees set by cryptocurrency exchanges to maintain a balance between futures prices and the underlying asset prices, typically in perpetual futures. They facilitate the exchange of funds between long and short traders. Bitget does not collect these fees but adjusts the cost or profit of holding futures to maintain alignment with the underlying asset's price. In cryptocurrency futures trading, funding rates ensure market fairness and stability by regulating the balance between long and short positions. What Are Funding Rates? The funding rate is determined by the spread between the perpetual futures market price and the spot price. This fixed fee is exchanged between investors (long and short). In bullish markets, the funding rate is positive and increases over time. Long traders of perpetual futures pay this fee to short traders. Conversely, in bearish markets, the funding rate is negative, and short traders pay the fee to long traders. Importantly, this fee is not charged by the exchange but is directly exchanged between traders to align trading prices with the spot index. Whether the funding rate is positive or negative determines which party pays the fee. Typically, when the funding rate is positive, indicating a bullish market trend, long positions pay the funding fee to short positions. Conversely, when the funding rate is negative, indicating a bearish market trend, short positions pay the funding fee to long positions. Funding fees are updated every 8 hours, at 8:00 AM, 4:00 PM, and 12:00 AM (UTC+8). Traders holding positions at these times will either pay or receive a funding fee. Bitget calculates these fees continuously to ensure seamless trading, though there may be a slight statistical delay in fee collection and payment due to ongoing trades. For instance, if an investor opens or closes a position at 07:00:05, they could still be subject to the funding rate. Therefore, it is crucial to be mindful of your trading timing. When a funding fee is charged, it is deducted from the user's fixed margin up to the point where their margin rate equals the maintenance margin rate. If there is an excess margin, it remains uncharged. The actual funding fee received by a user depends on the total deducted from the counterparty's account by the system. Higher leverage may exempt certain users from funding fees in specific cases. It is important to note that the funding rate is a distinct type of rate in futures trading, distinct from transaction fees. Transaction fees are paid to the exchange for buying or selling, while funding rates are exchanged directly between investors. How Are Funding Rates Calculated? The method for calculating the funding rate is generally similar across different exchanges. Bitget calculates the funding rate as follows: Funding rate = average premium index (P) + clamp {interest rate (I)− average premium index (P), a, b} Here, I = 0.01% represents the interest rate index. The average premium index P is the simple average of premium indices, reflecting the relationship between futures prices and spot index prices. The specific formula is as follows: Premium index = [Max (0, impact bid price − price index ) − max (0, price index − impact ask price)] ÷ price index The premium index is calculated every minute. Impact bid price = the average fill price to execute the Impact Margin Notional on the bid side. Impact ask price = the average fill price to execute the Impact Margin Notional on the ask side. Impact Margin Notional is the notion available to trade with 200 USDT worth of margin. The specific formula is as follows: Impact Margin Notional = 200 USDT ÷ minimum maintenance margin ratio While this calculation method may appear complex, it hinges on market dynamics, particularly the equilibrium between long and short positions. Investors need not delve deeply into the mechanics but should prioritize understanding the funding fee due at the timestamp, which is calculated as follows: Funding fee = position value × funding rate Position value = mark price at the time of funding fee payment × futures amount For example, trader A holds a long position of 10 BTC in perpetual futures of BTCUSDT , with a mark price of 70,000 USDT and a current funding rate of 0.01%. According to the formula mentioned above: Position value = 70,000 x 10 = 700,000 USDT Funding fee = 700,000 × 0.01% = 70 USDT Since the funding rate (0.01%) is positive, long positions pay short positions. Therefore, trader A will need to pay a funding fee of 70 USDT, while trader B, holding an equivalent short position, will receive 70 USDT. If trader A closes their position before the funding fee payment time, they will not need to pay this fee. Closing Thoughts However, funding fees are not entirely stable and are influenced by factors like market volatility and trading activity. Traders should closely monitor the market to adapt their trading strategies accordingly. In conclusion, the funding rate is a crucial mechanism that contributes to the stability and efficiency of the Bitcoin futures market. This mechanism ensures that the prices of perpetual futures align with the spot market, promoting a balanced development of the trading environment. In the highly dynamic world of Bitcoin futures trading, understanding how funding rates work and assessing their impact is crucial before making decisions. Like in other trading activities, well-thought-out strategies and effective risk management are essential for success in the cryptocurrency derivatives market. Related articles Bitget Beginner's Guide — What Are Futures? Bitget Beginner's Guide — How To Make Your First Futures Trade Bitget Beginner's Guide — How to Avoid Liquidation Bitget Beginner's Guide — A Comprehensive Introduction to USDT-M Futures, USDC-M Futures, and Coin-M Futures Bitget Beginner's Guide — Key Futures Trading Terms and Their Application Scenarios Bitget Beginner's Guide — Introduction to Futures Order Types Bitget Beginner's Guide — Introduction to Futures Trading Modes Bitget Beginner's Guide — Introduction to Margin Mode Bitget Beginner's Guide — Introduction to Take Profit and Stop Loss (TP/SL) in Futures Trading Bitget Beginner's Guide — Futures Transaction Fee Calculation

Bitget Hot Takes (April 15 - April 21, 2024) - All About Bitget

Bitget Hot Takes is the exclusive weekly newsletter series by Bitget Academy, which sums up BGB performance, what's new at Bitget, and the latest market movements. The latest Bitget Hot Takes can be found here: All About Bitget | Market Updates Central Themes • BGB prices remained above US$1.1, spread tightening. • Bitget Markets: activities subsided as the Bitcoin Halving approached. BGB Spread Has Tightened Even as the entire market held their breath, waiting for Bitcoin's leading moves, BGB as a delightful outlier still managed to hang on to the US$1 levels, with the weekly low being US$1.13 - only 6% down from the week's opening. It continued to rally on its own, especially during mid-week when others suffered from some minor bleeding, and closed Sunday with an 8% gain. The convergence of MACD lines and a 31% reduction in BGB weekly spread indicate a consolidating market, likely heralding an imminent directional move as equilibrium is reached. This contraction in volatility suggests less speculative trading and might be a precursor to significant price adjustments once new catalysts emerge, for example any breakouts of Bitcoin. Despite an upward accumulation trend signalling strong buying interest and supporting higher price levels, the RSI nearing 80 points to an overbought condition, hinting at potential pullbacks. However, the reduced market volatility could mitigate immediate downside risks, potentially sustaining current price levels unless triggered by adverse market movements. BGB volume increased slightly by 3.4%, which helps its liquidity remained above Bitcoin and BNB (and for good reasons a.k.a. accumulation). Want to learn more about BGB? Check out our BGB White Paper and BGB Intro and don't miss any new issues of Bitget Hot Takes, which always covers the latest analysis of BGB weekly performance! The Latest Bitget News We're delighted to bring you the new Bitget PoolX - our pioneering stake-to-mine platform that distributes rewards on an hourly basis, which means better opportunities for token holders to ride the waves! The latest pools include: • Apu Apustaja (APU): Stake ETH and USDT to mine APU • Artrade (ATR): Stake BGB and USDT to mine ATR • Rari (RARI): Stake BGB and USDT to mine RARI • Nettensor (NAO): Stake BGB and USDT to mine NAO Then goes the pioneering Bitget Pre-Market, an exceptional platform that permits early trading of new cryptocurrencies before their official listing. This avant-garde over-the-counter (OTC) marketplace empowers investors to engage in direct transactions, setting their own prices and quantities. By facilitating peer-to-peer exchanges, Bitget Pre-Market not only accelerates early adoption but also enhances price discovery. Whether you're looking to buy or sell, this platform ensures a fluid, secure trading experience with pre-frozen funds to guarantee transaction integrity. Step into the forefront of cryptocurrency trends and capitalise on emerging opportunities with unparalleled access through Bitget Pre-Market. Learn more about Bitget Pre-Market here: Introducing Bitget Pre-Market: Your Gateway to Early Coin Trading What else is in store for the bulls? Zero-fee for all Bitcoin and Ethereum spot transactions for Bitcoin halving and (possibly) the approval of a spot Ether ETF in the U.S. until May 20 and a Visa Card that allows its holders to pay for their real-world purchases with crypto ! With anticipation of a Bitcoin price breakout going hand in hand with uncertainties on a larger scale due to macroeconomic and geopolitical factors, many decided to remain quiet until further trends are confirmed, resulting in less activities across Bitget markets. Of course, in the case of futures markets, a great deal of liquidations must have taken place for those who bet on the immediate impact of the Halving event on Bitcoin. Despite some quietness, Bitget New Listings still managed to bring in some cool gainers with a 2x-3x value overnight: Want to know why we offer certain tokens on our dedicated platforms of Bitget Initial Listing, Bitget CandyBomb, Bitget PoolX, and so on? Check out our guides below: Alephium (ALPH): The Next Generation of Blockchain Innovation TEH $EPIK DUCK (EPIK): Quack Up Your Portfolio Build & Govern Your Own NFT Marketplace with Rarible (RARI) Nervos Network (CKB): The New Layer-1 Blockchain of Decentralization and Flexibility Merlin Chain (MERL): Unlocking Bitcoin's Potential With ZKP Layer-2 Playbux (PBUX): The Go-to Comprehensive Web3 Entertainment Platform Looking for extra earning options on Bitget? Check this out: • New user exclusive : 50% rebate for crypto purchases via Credit/Debit cards • Bitget Savings : New tokens can be added to our savings vaults within days after the listing with up to 100% APR for a limited time! • Bitget Launchpool : Similar to Bitget Savings, but it’s for BGB owners to put their holdings to work! Exclusive pools for new users as well! • Bitget Snowball and Bitget Smart Trend : New subscription period begins every Monday! • Weekly exclusive earning opportunities: Up to 10% APR on Bitget Wealthy Tuesday All Bitget Earn guides are available here: Bitget Range Sniper | Bitget Shark Fin | Bitget Dual Investment | Bitget Smart Trend | Bitget Snowball | Bitget Wealth Management New Events New user exclusive: Buy crypto to get up to a 50% rebate! Get $20 for becoming a merchant and $10 for referring a merchant to Bitget P2P Deposit to mine CKB! Trade to mine AQT! Deposit to mine EPIK! Trade to mine RARI! Deposit to mine OMNI1! Deposit to mine PRCL! Join the 2024 Bitget Builders Program: Become a million-follower influencer and unlock your wealth code! $100 No deposit bonus for meme season! Bitget April Trading: Chase the 1 BTC Halving Treasure Good Reads Alephium (ALPH): The Next Generation of Blockchain Innovation What is Telegram Open Network (TONCOIN)? Bitget Beginner’s Guide — How to Avoid Liquidation Bitcoin Halving Cycles and Why Invest in Bitcoin Now? Bitget Pre-Market and Bitget Launchpool: Unlocking Early Opportunities in Crypto Trading Simply create an account , and start exploring the incredible Bitget-Verse today!

Parcl (PRCL): Revolutionizing Real Estate Synthetics with Perpetual Trading

What is Parcl (PRCL)? Parcl (PRCL) is a decentralized perpetuals exchange designed specifically for real estate synthetics. But what exactly does that mean? Let's break it down. Traditionally, real estate investment has been associated with physical properties – buying, selling, and renting buildings or land. However, Parcl introduces a new way to real estate investment by creating synthetic assets tied to real estate market indices. These synthetic assets allow traders to speculate or hedge on the performance of real estate markets around the world without directly owning physical properties. How Parcl (PRCL) Works Parcl is basically a noncustodial automated market maker (AMM), offering perpetual synthetic assets that represent various real estate markets. Unlike traditional exchanges, Parcl employs a unique architecture to ensure solvency, eliminate credit risk, and maximize capital efficiency. The platform operates through isolated pools, each representing a distinct market, where traders can gain exposure to price feeds while liquidity providers (LPs) contribute collateral to facilitate trading. City Indices Central to Parcl's operation are its City Indices, which serve as barometers of real estate market health in specific cities. Instead of trading individual properties, users can engage with these indices, which represent the median price per square foot or square meter of real estate in a given city. This approach offers diversified exposure to entire city markets, simplifying the trading process for users. Isolated Pools Parcl's trading infrastructure revolves around Isolated Pools, creating segregated markets for different assets. Each pool focuses on a specific city index, allowing traders to interact within a defined market ecosystem. This isolation ensures efficient liquidity provision and risk management tailored to each market's unique characteristics. Liquidity Providers Liquidity Providers (LPs) play a vital role in facilitating trading activities in Parcl. LPs have the option to add liquidity in collateral, earning trading fees and sharing in trader profit and loss (PnL). This model fosters a symbiotic relationship between traders and LPs, creating a dynamic ecosystem where liquidity is readily available, and market participants can execute trades efficiently. Skew Management To maintain market equilibrium and mitigate risk, Parcl implements robust skew management techniques. Skew, the imbalance between long and short open interest in a pool, is actively monitored and managed through mechanisms such as skew impact fees and funding rates. Trades that worsen skew have to pay certain fees, so traders are incentivized to maintain balanced positions and the integrity of the market. Zero Credit Risk Unlike traditional margin trading platforms, Parcl operates on a zero credit risk model. By eliminating the need for borrowing on margin, Parcl minimizes systemic risk and enhances capital efficiency. Traders can select leverage up to 10x to amplify their exposure to price movements, without exposing themselves to undue credit risk. This innovative approach to trading ensures a level playing field for all participants and fosters a secure trading environment. Position Management Parcl understands that position management is crucial for ensuring liquidity and avoiding market manipulation. The platform provides traders with a range of tools to manage their positions effectively. Whether opening, partially closing, or closing positions, Parcl offers intuitive methods that empower traders to navigate the market with confidence. When it comes to opening positions, traders have the flexibility to deposit collateral, select leverage multipliers, and determine the direction of their trades. This streamlined process allows traders to initiate positions fast and efficiently. For those looking to adjust their exposure or secure profits, Parcl offers options for partially closing positions. Traders can reduce their position size while retaining some exposure to the market, thereby managing risk and optimizing their trading strategies more easily. In the event of adverse market movements leading to losses surpassing a predefined threshold, Parcl implements a robust liquidation mechanism. Any participant can initiate the liquidation process, so the positions can be closed swiftly to prevent further losses. This proactive approach safeguards the interests of all stakeholders, maintains the integrity of the platform, and preserves market stability. PRCL Goes Live on Bitget Parcl is a game-changer in the world of real estate synthetics as it offers a sophisticated yet accessible platform for traders and liquidity providers alike. With an innovative approach to liquidity provision, risk management, and price execution, Parcl sets a new standard for decentralized exchanges, unlocking unprecedented opportunities in finance. Trade PRCL token, the native token of Parcl, on Bitget to tap into the innovative world of real estate synthetics. Take the opportunity to join the growing community of traders leveraging Parcl's technology to unlock new opportunities in the digital asset space. How to Trade PRCL on Bitget Listing time: April 16, 2024 Step 1: Go to PRCLUSDT spot trading page Step 2: Enter the amount and the type of order, then click Buy/Sell For detailed instructions on how to spot trade in Bitget, please read The Uncensored Guide To Bitget Spot Trading. Trade PRCL on Bitget now! Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.

The Dawn of SOLS: A Beacon in the Crypto Landscape

In the ever-evolving tapestry of the crypto industry, a new contender has emerged, capturing the attention of enthusiasts and investors alike: SOLS. This article takes a deep dive into SOLS, exploring its inception, technological underpinnings, market impact, and the broader implications for the crypto ecosystem. Introduction to SOLS: Beyond the Basics At its core, SOLS represents more than just a digital asset; it embodies a paradigm shift in how we perceive Blockchain technology and its applications. While details about SOLS can be speculative, given the rapid innovation in the space, it's plausible to consider it as a token that leverages some of the most advanced features in blockchain technology today, possibly drawing inspiration from high-performance networks like Solana. SOLS is speculated to be built on a foundation that prioritizes scalability, speed, and efficiency. Drawing parallels with Solana, it could utilize a unique consensus mechanism, perhaps a variant of Proof of History (PoH), combined with Proof of Stake (PoS), to achieve unparalleled transaction speeds and throughput. This technological backbone is designed to support a wide array of applications, from decentralized finance (DeFi) platforms to non-fungible token (NFT) marketplaces, without the bottlenecks that have hampered older blockchain systems. Trade SOLS now on Bitget! Market Dynamics: Navigating the Waters The introduction of SOLS into the crypto market has stirred a significant buzz among investors and traders. Its launch is likely accompanied by a surge in trading volumes, as both retail and institutional participants seek to capitalize on its potential. The price volatility of SOLS, as with any cryptocurrency, is influenced by a myriad of factors including market sentiment, technological advancements, and broader economic indicators. As SOLS finds its footing, the initial fluctuations are a testament to the market's search for equilibrium, balancing the innovative potential against the inherent risks of new digital assets. Ecosystem Integration: A Synergistic Approach SOLS doesn't exist in isolation; it's part of a larger, interconnected ecosystem of tokens, platforms, and services. Its ability to seamlessly integrate with existing DeFi protocols, exchanges, and wallets is crucial for widespread adoption. Moreover, SOLS could potentially offer novel staking mechanisms, liquidity pools, and yield farming opportunities, further enriching the ecosystem and providing users with diverse avenues for engagement and investment. The Community Factor: Driving Adoption and Innovation The success of SOLS, much like any crypto asset, hinges on the strength and engagement of its community. From developers and content creators to everyday users, the community's role in shaping the trajectory of SOLS cannot be overstated. Through active participation in governance, development, and content creation, the community ensures that SOLS remains responsive to user needs and stays at the forefront of blockchain innovation. Regulatory Landscape: Navigating Compliance The regulatory environment plays a pivotal role in the adoption and growth of SOLS. As regulatory bodies around the world grapple with how to oversee the burgeoning crypto industry, SOLS must navigate these waters with agility. Ensuring compliance with varying regulatory standards across jurisdictions is paramount for maintaining user trust and securing the platform's longevity. Future Outlook: What Lies Ahead for SOLS Looking ahead, the potential for SOLS within the crypto industry is vast. As the technology matures and the ecosystem expands, SOLS could become a cornerstone of the next generation of blockchain applications. Its focus on scalability, speed, and user experience positions it as a candidate for widespread adoption, not just within the crypto space but also in mainstream financial systems and beyond. How to trade SOLS on Bitget Step 1: Go to the SOLSUSDT spot trading page Step 2: Enter the amount and the type of order, then click Buy/Sell. For detailed instructions on how to trade spot in Bitget, please read The Uncensored Guide To Bitget Spot Trading. Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.

Understanding Spot Bitcoin ETFs: A Beginner's Guide

Spot Bitcoin Exchange-Traded Funds (ETFs) debuted in the US in January 2024 and have stirred conversations across the financial landscape since then, but how do these financial instruments operate? Here’s an easy-to-understand breakdown. What Makes Spot Bitcoin ETFs Unique? What sets the approval of spot Bitcoin ETFs apart is the tangible involvement of actual Bitcoin. The biggest difference between a futures Bitcoin ETF and a spot Bitcoin ETF is the ownership of assets: a spot ETF engages in the purchases and management activities of actual Bitcoin, while a futures ETF simply provides investors with exposure to Bitcoin futures contracts on CME. Each type has its pros and cons, and just like how spot and futures markets for all assets have and will still coexist for diversification and hedging purposes, we expect futures ETFs to be hanging around to satisfy different risk appetites as well as investment needs. Hence, the traditionally conservative institutional investors will now have a streamlined avenue to add Bitcoin exposure directly through spot ETFs. This shift may further legitimize Bitcoin as an asset class and enhance its acceptance among mainstream financial institutions. How Do Spot Bitcoin ETFs Operate? Seed Fund The journey of a Bitcoin ETF starts with a fixed amount of Bitcoin, known as a seed fund, which must be approved by the SEC (U.S. Securities and Exchange Commission). Bitcoin ETF Share Value A spot ETF holds Bitcoin directly, and its share value is directly linked to the spot price of Bitcoin, not the supply and demand of the shares. The ETF Provider, the Investor, and the Market Maker The three key parties in any ETF are the ETF provider, the investor, and the market maker. Currently, most spot bitcoin ETF trading occurs directly between investors. However, in situations where the market is unbalanced, market makers can either create new shares or buy them back to maintain market equilibrium, regardless of their immediate access to physical shares or funds. For instance, should Alice wish to acquire ten shares but face a shortage in supply, a market maker intervenes by generating ten shares for sale to Alice. Subsequently, when Bob decides to offload his ten shares, the market maker allocates Alice's payment to Bob, thus ensuring liquidity and aligning the ETF’s price with Bitcoin's market price through share adjustments. For the investors (Alice and Bob), the execution of their orders appears instantaneous. On the part of the ETF provider, it's crucial to maintain enough Bitcoin reserves to comply with SEC regulations. They have to purchase or sale of Bitcoin for their funds within 24-48 hours (T+1/T+2) post-receipt of the trading order. This process is known as the ETF flow, with inflows indicating investments into the fund and outflows indicating share redemptions or withdrawals. While the basics are covered above, it's important to note that the operation of these ETFs is affected by a wide range of factors, including market dynamics, regulatory frameworks, and risk management strategies. Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.

Bitcoin $30K Region Gaining Significance Amongst the Bulls and Bears

Looking at the current state of being on Bitcoin in Week 29 of 2023 Fundamentals: A blessing and a plague After a rapid increase of its US$ 32,000 resistance region Bitcoin has seen multiple downfalls since then as the fundamental aspect of Bitcoin remains mixed. On one hand, we are seeing an increase in demand on the derivative contracts, and a continued premium on the BTC futures contracts, known as contango, suggesting a decent bullish conviction for another increase in price.At the same time, the macroeconomic environment has not been giving space for on-risk assets such as Bitcoin to continue to thrive, as Asia is falling short of market expectations missing its gross domestic product growth expectations. Additionally, the ongoing trade war between the U.S. and China and the U.S. debt issues create a favorable scenario for bears, supporting the thesis of US$ 30,000 as resistance to strengthen. Technical Analysis Overall, Bitcoin remains within a confined range, marking US$ 32,000 as its main resistance, and its US$ 29,500 region as support with a well-defined equilibrium in the middle of its trading range sat at US$ 30,500, represented in Figure 1. below as red, green, and orange. Ultimately breaking above either the green or red box would show a clear progression and continuation of the next section of the chart as Bitcoins narrative unfolds. figure1 The orange line functions as an equilibrium, that acts as a sublevel resistance in case price spends time below the region, whereas a slightly more bullish case can be made if price spends time above it. From the image below, it becomes clear that price recently has spent a significant amount of time below its equilibrium, and as of the time of writing, therefore, favours a slightly bearish case, indicating the red box to be challenged shortly again. If bitcoin reclaims the equilibrium the fundamentals will shift in favor of the bulls, after which another increase in price becomes more likely. Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.

Ethereum Value and Price (Part 1)

This is an attempt to rationalise the market's imperishable hype with Ethereum - the Mother of all altcoins. One of the key articles in Bitget Academy’s 101 Series is Bitcoin Value and Price, where we discuss the determinants of Bitcoin price and how the mass adoption is reflected in its price. Now, it is a general perception that Ethereum and Bitcoin are different in nature. The questions have become: should we give Ethereum the status as money, and if yes, how can it be valued? The Current State Of Ethereum Markets According to Google Trends, the number of searches for ‘Ethereum' reached its peak during the bull market of 2021 before crashing in 2022 - twice - due to the Terra (LUNA) collapse and the FTX demise. Of course we are seeing some interest surge around the announcement and the actual event of Ethereum Merge, an event expected to push the token's price much higher. Ethereum market share has taken off since the start of 2023, though it doesn't seem to be shown in the level of Google interest. If Bitcoin dominance averages at 42.5% year-to-date, Ethereum has no trouble maintaining its second place with 18.1%, which is way ahead of the third-largest cryptocurrency Tether (USDT) at 6.7%. Mind you that Tether is a stablecoin, thus often considered a safe option to onboard crypto by newbies. This analysis is divided into two parts; Part 1 explores Ethereum's utilities and Part 2 introduces some valuation framework for ETH. The Future Of Money The most well-known Bitcoin notions are ‘Bitcoin as a store of value’ and ‘Bitcoin as a medium of exchange'. Those are just dimensions of money; from a store of value to a medium of exchange then to an unit of account, any item must tick all the characteristics of scarcity, durability, acceptability, portability, divisibility and fungibility. Let's see if Ethereum can fulfil these requirements. Durability, Portability, Divisibility and Fungibility As a digital asset and a programmable money, Ethereum for sure is: • durable: It can't be spoiled; damage or alter is only possible if the attacker breaks through the defence of large networks such as Ethereum (PoS). One must own at least 51% of the total staked ETH to corrupt the very same network, and consequently risk losing all their assets should a slashing take place. • portable: ETH is a digital money used on the Internet, especially for peer-to-peer transactions regardless of place and time. • divisibility: ETH has an extremely high degree of divisibility as one Ethereum is represented by 1018 gwei, the smallest denomination. That allows Ethereum to be utilised even by the world population. • fungibility: any two gwei or two ETH are interchangeable, and that makes the ERC-20 ETH fungible. Scarcity The scarcity principle talks about the relationship between limited supply and growing demand and how the equilibrium price will go up as a result. The original PoW Ethereum is an inflationary asset, meaning that there are more ETH going into circulation everyday, whereas Bitcoin supply is capped at 21 million. A reason, albeit not the main one, for the Ethereum Merge execution is to reduce the ETH supply and thereby increase its value. Take a look at the ETH supply chart below. The amount of daily rewarded ETH significantly decreases with the shift to PoS consensus, turning the net supply growth rate a.k.a. the annualised difference between daily ETH issuance and daily ETH burn to negative. It translates to an ETH deflation or an ever-decreasing supply of ETH, and the chart shows that ETH price tends to move in the opposite direction of its supply change. Summary: Less ETH in circulation after The Merge, ETH prices climb up. Stability Stability is the most crucial money attribute because none of the given dimensions of money can hold if its value keeps changing. Ethereum value rises and falls equally to periods of euphoria (DeFi Summer, bull market 2021) as well as crashes (May and November 2022). However, it's worth mentioning that Ethereum volatility has clearly declined over time, showing signs of better resistance towards market events such as the fall of FTX in November 2022 and staying well below 10% p.a. since 2023. Also important is how easily ETH value changes compared to other assets. We choose the NASDAQ Composite Index (COMP) as the stock/TradFi representative here due to the tech-savvy nature of this market and the Dollar Strength Index (DXY) for the US-Dollar is the global reserve currency. As of June 18, 2023, Ethereum volatility is nearly three times higher than that of COMP and 7.5 times higher than DXY. Historically speaking, Ethereum had always been more volatile than Bitcoin, but we already have two periods of ‘ETH volatility lower than BTC' in April and June 2023. This is a good start. Acceptability and Cognisability With a market cap of US$207,595,972,780 (as of June 18, 2023), Ethereum has remained the second-largest cryptocurrency by market cap for at least five years. The number of daily transactions on Ethereum looks remarkably stable throughout the years but is second to BNB Chain's daily transactions, mostly because of the exorbitant gas fees. BNB Chain is cheaper and hence has become home to a plethora of crypto projects during the 2021-22 bull cycle, even though 12% of BNB Chain-based tokens have fraudulent characteristics, per Solidus Labs. Ethereum developers plan to reduce gas fees on the network by introducing Sharding. Once successfully executed, this entry barrier to Ethereum will be lowered, resulting in a new wave of investors flocking to the ecosystem. Big guys, on the other hand, have already aped in via liquidity staking derivatives (LSDs) with eagerness. More on Sharding, ETH tokenomics and LSDs can be found here. It's safe to say that DeFi, and even NFT, originates from Ethereum, and many L2s are built on Ethereum, too. Ethereum is also widely recognised as the first bona fide Bitcoin's alternative - therefore the ‘Mother of All Altcoins'. A sound investment In light of recent lawsuits against Binance and Coinbase, the Securities and Exchange Commission (SEC) has published a list of tokens that they refer to as ‘securities’, including BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, COTI, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO. It seems that the securities regulator has a not-so-hostile attitude towards Bitcoin and Ethereum, whilst the Commodity Futures Trading Commission (CFTC) has stated several times that Ethereum is a ‘commodity'. As long as Ethereum has nothing to do with the term ‘security', it should easily outperform other altcoins in the long run. To avoid the hassle that may arise with owning the actual Ethereum, Bitget offers a variety of Ethereum trading products, such as Bitget USDT-Ⓜ Futures, Bitget USDC-Ⓜ Futures and Bitget Copy Trade, all of which can give our users better, yet indirect, exposure to this token. Not yet a Bitgetter? Register with us today! Despite the fact that crypto prices are more volatile than stocks, their yields are actually higher. For example, the year-to-date return of ETH is 1.4 times higher than COMP as shown in the chart below. It's simply a trade off between risk and return. Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.