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Forging A New Financial System From Scratch: Will Ethereum Dominate?

The concept of a smart contract platform that allows you to build decentralized applications is no longer unique, but Ethereum remains a trailblazer and is arguably more important than Bitcoin. 

Whereas Bitcoin is more about security and ownership and really best described as a potential digital safe haven asset, Ethereum is all about building a decentralized ecosystem – or perhaps a DeFi universe. 

More and more, as Bitcoin continues to trade within a relatively narrow price band, Ethereum has been on the rise. It’s not just because of its reputation as a solid crypto asset or that of its main spokespersons, nor is it about the comprehensiveness of its product roadmap

If anything, it’s the crucial role Ethereum plays in erecting a decentralized financial infrastructure which allows for participants in crypto to engage in borrowing, lending, storing, transacting, payments, trading, staking and insurance, all with ‘programmable money’ and self-executing contracts, and, indeed, without relying on third-party oversight or custody.

The potential for this should not be underestimated. As mentioned by BitWise, in a recent newsletter to investors: Even though a lot of new fintech companies and banking apps have entered the finance space in the past few years, these services are for the most part still reliant on outdated programming language (COBOL) which dates back to 1959 (when programmers still used punch cards). 

Making the case for Ethereum, of course, does not discount other crypto assets. While the same speculative trading culture is present in all crypto markets, a deeper look at the various coins quickly reveals how much they differ in both aims and means. The battle for being the dApp protocol of choice differs from competitive innovation around privacy or alternative online revenue models.

DeFi is still in its initial stages, but it has been gaining more and more traction. We can see this in the work being done around stablecoins – in particular Tether and USDC, but also other projects like MakerDAO. These fiat pegged tokens are incredibly important for traders as a settlement currency as it allows traders to mitigate risk during times of significant volatility. 

Lending is another important area of rapid development, with Ethereum-based Compound Finance, an algorithmic, autonomous interest rate protocol built for developers, to unlock a universe of open financial applications. Compound provides the functionality you might expect from a bank: Savers can deposit cryptoassets and earn interest, while borrowers can access collateralized loans on the platform.

Other coins that merit close attention and are critical to growing to the DeFi space include Cardano (ADA), Chainlink (LINK), Synthetix (SNX), and Aave (LEND).


While Ethereum cannot claim all the glory, we do believe this classic crypto asset is worth keeping an eye on, and based on your view on the market, we do also encourage our community to explore trading contracts for Ethereum.

On AAX, we offer BTC-settled perpetual contracts for ETHUSD which can be traded with up to 50x leverage. This instrument allows investors in Ethereum to bet against Ethereum if they see fit, amplify their exposure, or hedge against risk. 

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AAX is the world’s first digital asset exchange to be powered by LSEG Technology. Offering OTC, spot, and futures, it provides a highly secure, deeply liquid and ultra-low latency trading environment; and a meeting point between crypto and global finance. 

Open an account with AAX, or download the app, and experience the next generation crypto exchange.

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