Ex-Ark analyst James Wang explains why he thinks Ethereum will ‘easily’ approach $10,000 by year’s end if market action improves — and discusses three under-the-radar coins that are sparking a small DeFi renaissance.
Cathie Wood’s Ark Invest had roughly $20 million in assets under management when James Wang joined as an analyst in 2015. The famous money manager had developed into a multibillion-dollar enterprise by the time he departed.
Wang is now the head of tokens at Amun, a decentralized finance-focused crypto asset management, and hopes to see a similar sort of exponential growth there.
In an interview, he remarked, “It’s starting all over again, which is both terrifying and exhilarating.” “I believe getting from zero to one to truly get it off the ground is the most satisfying aspect.”
Wang believes that decentralized finance, particularly DeFi apps built on top of the Ethereum network, has enormous development potential. Given his technical experience, Wang was an early ether bull, believing that ether might reach $40,000, according to Arthur Hayes, the former CEO of the crypto exchange BitMEX’s valuation methodology. On Friday, the cryptocurrency reached a new high of around $4,400.
Even as competing layer-one protocols such as Solana, Polkadot, Cardano, and Avalanche have popped up and increased in popularity in recent months, he has become more confident in Ethereum. In terms of key principles, use cases, and business models, he believes these alternative networks are essentially “copy-and-paste copies of the Ethereum protocol.”
But it’s Ethereum’s tenacity in the face of all this competition that he finds most impressive.
While the amount of total wealth locked on Ethereum for DeFi has plummeted to roughly 70% of market share from nearly 99 percent six months ago, Wang claims that several of the protocols to which Ethereum has lost market share are “heavily rewarded.” He was alluding to the numerous incentive packages put in place by rival protocols to get DeFi apps to migrate to their networks.
“They’re essentially handing out free money,” he explained. “They have been able to attract some capital using that very crude brute force strategy, but this capital tends to be quite mercenary. This money will travel where the best payout is, go-between chains, and flip frequently.”
How Ethereum could reach $10k by yearend
Ethereum, on the other hand, which now boasts the “most developed software development ecosystem,” is still undergoing significant technological advancements.
According to Wang, the price of transactions on the Ethereum blockchain will drop to levels lower than those of rivals as additional layer-two solutions and rollups are deployed over the next year. The widely anticipated mid-2022 combination of Ethereum’s mainnet and beacon chain, which will see the network formally switch to proof-of-stake from proof-of-work, may fundamentally transform the narrative and cause ether’s price to “go ballistic and wild,” he warned.
“Ethereum’s trajectory over the next year is truly unprecedented in its history,” he remarked. “If it succeeds, I believe the distance between Ethereum and the other layer-one cryptocurrencies would expand considerably. Then, and only then, will the market begin to value them fairly?”
In the short term, Ethereum has reaped the benefits of EIP-1559, a major network update that has resulted in the burning of 660,609 ether tokens worth around $2.8 billion as of Thursday afternoon. Meanwhile, as Real Vision CEO Raoul Pal recently pointed out, ether, which was selling at $4,249, has been mirroring the 2017 price behavior of bitcoin, which skyrocketed to $20,000 from $1,000 largely in the fourth quarter of that year.
“With some favorable price activity, I think we may easily approach $10,000 this year,” Wang added.
3 tokens leading a ‘mini DeFi resurgence’
Non-fungible tokens have been the talk of the town since last year’s “DeFi summer.” However, Wang claims that there has been a “little DeFi resurrection” or “DeFi 2.0” in recent weeks.
The “DeFi 2.0” movement is fueled by three under-the-radar protocols in particular. OlympusDAO (OHM), Abracadabra’s Magic Internet Money (MIM), and Tokamak are the three companies (TOKE).
“All three of these are approaches to improve the efficiency with which existing protocols give liquidity to their customers so that they may trade their tokens,” Wang explained.
OlympusDAO is a decentralized autonomous organization that has produced OHM, free-floating money or algorithmic stablecoin, as its native token. This implies that instead of being tethered to the dollar or other fiat currency, the token is backed by a basket of decentralized assets. Many crypto traders have taken notice of the protocol owing to its astronomically high staking APY of 8,159 percent. According to CoinGecko, the OHM coin has increased by 88.3 percent in the last 30 days.
Abracadabra is a lending platform that allows users to utilize their interest-bearing tokens as collateral to borrow Magic Internet Money, a multi-chain stablecoin (MIM). Its goal is to assist traders in gaining access to liquidity in interest-bearing tokens that they currently hold but are unable to utilize. According to the initiative’s Medium page, the project is vulnerable to liquidation risk, smart-contract vulnerabilities, and attacks, much like all DeFi borrowing and lending protocols.
The tokamak is a decentralized liquidity network and market-making protocol with the goal of achieving long-term DeFi liquidity and capital efficiency. In the last month, the value of its native token has increased by 60.9 percent.