How Ethereum’s Ascendancy Affects Fan Tokens

Ethereum hit a new all-time high on Aug. 23, marking the peak of a 228% increase in value that started just four months prior. 

Many analysts see the rise of Ethereum as a sign of increased institutional adoption, and foresee the transformation of a once speculative altcoin into a true bedrock of institutional finance.

Ethereum: TradFi, Not Just DeFi

The statistics back up that assertion: since 2023 the value of real-world assets (RWA) on the blockchain has increased by 413% – climbing from $5.2 billion to $26.7 billion, according to analytics website RWA.xyz.

Financial assets such as corporate bonds, private credit, commodities, stocks and U.S treasury debt have all found their way onto the blockchain in recent years, as major traditional-finance players realise the utility, speed and cost-efficiency of tokenizing real-world assets.

Ethereum appears to be the blockchain of choice for tokenizing RWA’s, accounting for the most assets (419) with a market share of over 53%. 

Once considered a blockchain purely for decentralised finance (DeFi) activities, Ethereum is now used by major financial institutions such as Blackrock, Franklin Templeton, WisdomTree, and many others, to host financial assets, monetary funds, and stablecoins.

Home of Stablecoins

Since 2020 alone, the global value of stablecoins in circulation has increased 5,580% – from $5 billion to just over $284 billion.

Of that figure, over 52% is accounted for by stablecoins running on the Ethereum blockchain, according to analytics website, DeFiLlama.

Once viewed as a tool only for cryptocurrency traders, stablecoins have emerged as a viable tool in the realm of global finance, and Ethereum is the bedrock for the majority of the stablecoin market.

And now, with the maturation of legal frameworks for stablecoins – as exemplified by the GENIUS Act in the U.S – issuers and users alike can operate without fear of stablecoins unfairly being treated as securities by regulators. 

Ethereum: A Route to Fan Tokens

Given that stablecoins like USDT (Tether) are often the main trading pair for Fan Tokens, it’s easy to see how a rising tide for Ethereum can be the catalyst that lifts the Fan Tokens ship.

Additionally, it has long been observed that growth to the likes of Bitcoin and Ethereum often finds its way into the altcoin market. 

Indeed, since Ethereum’s 116% increase starting on June 23, much of the Fan Token market has followed suit. 

Numerous major Fan Tokens began a resurgence on June 23, hand in hand with Ethereum, suggesting traders are willing to invest some of their ETH gains into the Fan Token market almost immediately.

As the perception of Ethereum changes from DeFi-plaything to a true platform for traditional finance, so too can the concept of Fan Tokens potentially benefit from Ethereum’s newfound legitimacy among traditional investors. 

Greg Thomson: Fan Tokens Market Reporter