Ethereum Classic (ETC) Rallies Against Market Following Native Stablecoin Launch and Upcoming Halving in 7 Days
In recent weeks, Ethereum Classic (ETC) has experienced a notable resurgence, expanding to $33.13 and growing nearly 22% in just a week. Often considered undervalued, ETC has historically followed the rallies of its more prominent counterpart, Ethereum (ETH). This recent price hike coincides with the network’s launch of a new native stablecoin and anticipation surrounding its upcoming block reward halving.
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The Rise of ETC: Recent Performance and Market Trends
ETC Gains Momentum
Ethereum Classic has accelerated its gains significantly over the past few days. After months of limited price increases, ETC has gained substantial momentum. This renewed interest is largely attributed to upcoming network events, such as the impending halving of its block reward, which has drawn additional attention to the token.
Impact of the Halving Event
The current block reward for ETC is 2.65 coins, which will decrease to 2.048 ETC after the halving. The Ethereum Classic code was altered to prevent the Mining Ice Age—a legacy issue from its fork from Ethereum. While the halving event will keep ETC in the spotlight, it is not expected to have an immediate deflationary effect. ETC mining has been highly efficient, producing over 147 million tokens, compared to Ethereum’s 120 million.
Circulation and Staking
ETC is fully in circulation without staking requirements, distinguishing it from Ethereum. This means Ethereum Classic cannot host liquidity token projects like Lido DAO or build a re-staking layer like Eigen Layer. This limitation impacts the ecosystem’s ability to grow in certain decentralized finance (DeFi) areas.
Trading Surge: Spot and Futures Market Analysis
Increased Trading Volumes
In recent days, trading volumes for ETC have expanded dramatically, rising tenfold to reach $1.6 billion per day. This surge in trading activity has been fueled by the overall positive sentiment following the approval of all ETH spot ETF products.
Futures Trading Prospects
In addition to spot trading, ETC has seen an expansion in futures trading. This indicates a more significant rally may be on the horizon as traders anticipate further gains. Despite relatively modest performance earlier in 2024, with a 50% growth from a low of $15, ETC is now aiming for higher peaks.
Ecosystem Development: Challenges and Opportunities
Decentralized Applications (DApps)
In theory, Ethereum Classic should be capable of supporting applications similar to those on Ethereum. However, the growth of decentralized apps (DApps) on ETC remains limited. Currently, Ethereum Classic hosts four main decentralized exchanges (DEXs), with a total value locked (TVL) of $607.77 million. These DEXs have seen increased volumes recently as ETC approached the $30 mark.
Limitations in DeFi
Despite these gains, ETC does not yet host lending or liquidity farming applications. Like Ethereum, Ethereum Classic faces challenges in scaling its network, which affects its ability to support a broader range of DeFi projects.
Potential for Stablecoins
Ethereum Classic is widely recognized but has not yet hosted its version of Tether (USDT). One key reason for slower adoption is the network’s vulnerability to 51% of attacks, which occurred as recently as 2020. Despite increasing its hash rate, ETC remains susceptible to such attacks, leading centralized exchanges to require many confirmations for ETC deposits. For instance, Coinbase requires up to 3,000 block confirmations, significantly more than typical for other cryptocurrencies.
Introduction of Classic USD (USC)
Despite these challenges, Ethereum Classic recently announced the launch of Classic USD (USC), its native stablecoin. This new asset aims to enhance the liquidity of DeFi projects on the ETC network. The stablecoin’s selling point is the low transaction fee of $0.01, applicable to around 22,000 active addresses per day, with potential growth during peak usage periods.
Mining Activity and Network Security
Pre-Halving Mining Surge
Ethereum Classic mining activity has increased by over 60% since April, as miners aim to maximize their token holdings before the halving event. However, this uptick in activity also indicates that there may be substantial mining facilities that could direct resources to ETC, highlighting the ongoing risk of 51% attacks.
Market Performance and Profitability
The profitability of mining ETC will depend on the token’s market performance. At current prices, some miners can operate profitably without needing new equipment. This dynamic could influence the network’s security and stability in the long term.
Conclusion: The Future of Ethereum Classic
Ethereum Classic is at a pivotal moment in its development. With significant gains in recent weeks, increased trading volumes, and the introduction of a native stablecoin, ETC is poised to attract more attention from investors and developers alike. However, the network must address its security vulnerabilities and scaling challenges to sustain this growth. As the halving event approaches and the ecosystem continues to evolve, Ethereum Classic has the potential to carve out a more substantial role in the cryptocurrency market.
