Historically, the value of Ethereum, mainly its wrapped variant wETH, has been influenced by a metric known as Multi-Collateral DAI repaid. Notably, this metric has recently increased. What potential trajectory might Ethereum be poised to take in light of this sudden spike?
According to a recent Santiment post, Ethereum may rise due to recent developments. According to the Multi-Collateral DAI Repaid chart, 43.42 million coins were repaid using Wrapped Ethereum (wETH).
Previous spikes in this metric coincided with local market bottoms and tops. According to the chart, the most recent spike occurred on February 18 and involved the repayment of over 78 million coins. The wETH and ETH values reached a local high following this significant repayment.
Wrapped Ether (wETH) is an ERC-20 token designed to represent Ether (ETH) on the Ethereum blockchain. It enables Ether to be used in smart contracts and decentralized applications (DApps) specifically designed to work with ERC-20 tokens.
Furthermore, wrapping Ether makes it compatible with the ERC-20 standard. Each wETH token is backed by an equivalent amount of Ether held in the custody of a secure smart contract. Even though wETH and Ether are distinct assets, they can be exchanged directly at 1:1. These tokens are freely tradeable, transferrable, and usable in Ethereum-based applications.
“Multi-Collateral DAI” refers to DAI, a stablecoin, and its expanded functionality. SAI, DAI’s predecessor, was initially limited to the Ethereum blockchain and could only accept ETH as collateral. The token, however, became compatible with multiple smart contracts with the introduction of Multi-Collateral DAI.
This enhancement enabled the use of various cryptocurrencies as collateral for generating DAI. This broadens the assets that can be used to back the stablecoin. In essence, Multi-Collateral DAI broadened the collateral options beyond ETH, allowing users to obtain DAI using a variety of cryptocurrencies.
Despite the anticipated impact on ETH’s price trend, the daily timeframe shows no significant changes. As of this writing, ETH was trading at around $1,790, representing a marginal loss. It was worth noting that the short Moving Average had now turned into a resistance zone, costing around $1,890.