The value of Ethereum, mainly its wrapped variant wETH, has historically been influenced by Multi-Collateral DAI repaid. Recently, there has been a surge in this metric, indicating a potential trajectory for Ethereum. This article delves into the significance of this surge and its possible implications for the future of Ethereum.
A recent analysis by Santiment suggests that Ethereum may be poised for a favorable trend due to recent advancements in the Multi-Collateral DAI repaid metric. The chart depicting the repayment of 43.42 million coins through Wrapped Ethereum (wETH) has caught the attention of market observers.
Historical data reveals that previous spikes in this metric have often coincided with local market bottoms and tops. A closer look at the chart shows that the most recent spike occurred on 18th February, with a repayment of over 78 million coins. Subsequently, the value of both wETH and ETH reached a local peak.
Wrapped Ether, known as wETH, is an ERC-20 token representing Ether (ETH) on the Ethereum blockchain. It enables the utilization of Ether within smart contracts and decentralized applications (DApps) specifically designed to work with ERC-20 tokens.
By wrapping Ether, it becomes compatible with the ERC-20 standard, backed by an equivalent amount of Ether stored in a secure smart contract custody. Although wETH and Ether are distinct assets, they can be exchanged directly at 1:1. These tokens can be freely traded, transferred, and utilized in Ethereum-based applications.
The term “Multi-Collateral DAI” refers to the expanded functionality of DAI, a stablecoin. Initially limited to the Ethereum blockchain and accepting only ETH as collateral, the introduction of Multi-Collateral DAI broadened its compatibility with multiple smart contracts.
This enhancement allowed various cryptocurrencies to be utilized as collateral for generating DAI, increasing the range of assets backing the stablecoin. In essence, Multi-Collateral DAI expanded the collateral options beyond ETH, enabling the use of different cryptocurrencies to obtain DAI.
Despite the potential impact on the price trend of ETH, the current daily timeframe does not indicate any significant changes. At the time of writing, ETH was experiencing a marginal loss, trading at approximately $1,790. It is worth noting that the short Moving Average has now become a resistance zone, located around $1,890.
While the recent surge in Multi-Collateral DAI repaid suggests a potential trajectory for Ethereum, current market conditions remain cautious.
Source: https://bitcoinworld.co.in/the-potential-trajectory-of-ethereum-exploring-the-recent-surge-in-multi-collateral-dai-repaid/