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Ethereum May Consider DAO Stablecoins for the Future as ETH Slides

Vitalik Buterin, one of Ethereum’s [ETH] co-founders, wrote on 5 December that DAO stablecoins may be crucial to the platform’s long-term success. The crypto industry titan cited the coins’ ability to facilitate collateralization as evidence that they are the most suitable.

Furthermore, Vitalik mentioned that stablecoins with a strong governance framework, such as RAI, could have been taken into account. It was not a viable option due to its negative interest rate and high risk of default.

The founder continued to defend his position by citing MakerDAO [MKR] and its stablecoin, DAI, as examples of projects that could serve as industry leaders. Despite its originality, he conceded that MKR was not without its problems. But he cautioned that unless the project increased productivity, MKR might be optimal only in the long run. Vitalik commented,

Maker is a fine model to get a stablecoin started, but not a good one for the long term. Hence, making decentralized stablecoins work long term requires innovating in decentralized governance that does not have these kinds of flaws.

Upon further inspection, it became clear that the FTX collapse had exacerbated the preexisting problems with exchange deposits, most notably among Ethereum users. Santiment reports a precipitous fall in exchange supply.

As of this writing, there were only 14.82 million ethers available on the exchange market. That’s why it makes sense that investors might share Vitalik’s view if they can reap the benefits of decentralization.

Despite this, the Ethereum blockchain has not been particularly busy with transactions recently. This was due to the fact that the number of cubic feet of gas in use had dropped to 16.78 billion as of the time of writing. As a result, this was one of the challenges ETH faced in maintaining a profit.

According to CoinMarketCap, Ethereum’s 24-hour performance was a decrease of 3.08%. The RSI reading on a four-hour time frame chart was 49.65. At this juncture, ETH had good upward momentum for buyers.

Ethereum has recently recovered from an oversold condition, but this hasn’t stopped a large amount of money from being ignored as it attempts to enter the market. This was because the signal strength from the On-Balance-Volume (OBV) was low. The drop in OBV to $1,757,000 indicated that ETH had failed to fend off sellers.

Above, we can see that the OBV’s indication of seller control is corroborated by the Directional Movement Index (DMI). Because the negative DMI (in red) was positioned above the positive DMI, we reached this verdict (green).

ETH may have a tough time getting back up to parity with an ADX of 28.38. However, investors shouldn’t give up hope just yet.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.