In 2019, Tether issued approximately $ 2.3 billion onto Ethereum, with more than $1 billion of that total directly coming at the expense of Bitcoin’s Omni. This was the largest migration of assets from one blockchain to another in history.

MakerDAO, the protocol which supports the Dai stablecoin (covered extensively in Year in Ethereum 2018), went through a major upgrade. While originally DAI could only use ETH as the “single collateral” available to issue new DAI, in November MakerDAO successfully launched “Multi collateral DAI” which makes it possible to use many assets on Ethereum in the system.

💥 A Cambrian explosion of Ethereum-based assets

One major new trend in DeFi is the expansion of products and protocols that facilitate the use of synthetic assets. By “synthetic asset” we simply mean an asset that is designed to have specific characteristics, often imitating the profile of other assets.

The programmability and interoperability of assets on Ethereum makes this easy. Using Ethereum smart-contracts, developers have created assets that track the value of other cryptocurrencies, automatically implement specific trading strategies, or create custom derivatives.

Set protocol launched TokenSets in April, a suite of products that allow anyone to purchase an ERC-20 that then implements a specific trading strategy. For instance, you might buy $1,000 worth of the “ETH 20 Day MA Crossover” set, which rebalances between ETH and the USDC stablecoin, depending on a specific market indicator. The goal is that when ETH is rising, this TokenSet is mostly ETH, and when ETH is falling, it swaps into a stablecoin to avoid losses.

Universal Market Access (UMA) introduced a service that lets anyone create synthetic tokens that track the price of real-world assets like stocks, or really anything at all that you have a price feed for. At the ETHBoston hackathon, hackers used UMA to create a synthetic asset that tracks whether DAI deviates from its dollar peg, resulting in a massive payoff if the peg breaks. At ETHWaterloo, the UMA team created a synthetic asset that tracked the amount of human fesces sightings in San Francisco, which they promptly integrated into a fork of Uniswap so people could trade it on testnet.

Synthetix launched their “synths” product, which are ERC-20s that track the value of major currencies, commodities, or indices. Notably, Synthetix began trying to implement their protocol on EOS, decided it was a mistake, and have doubled down on building on Ethereum.

In 2019, users paid approximately $3.5 million in fees to use Synthetix, a total that is greater than the sum of all transaction fees paid on every blockchain other than Bitcoin and Ethereum.

Also in 2019:

Efforts to make Bitcoin useable on Ethereum gained momentum . Kyber, Bitgo, and Republic launched wBTC, an ERC-20 backed by real Bitcoin, stored with trusted custodians. In August, Keep & Summa announced their plans for “trustless BTC” (tBTC), which required no central counterparty to custody the BTC. Launched is planned for 2020.

. Kyber, Bitgo, and Republic launched wBTC, an ERC-20 backed by real Bitcoin, stored with trusted custodians. In August, Keep & Summa announced their plans for “trustless BTC” (tBTC), which required no central counterparty to custody the BTC. Launched is planned for 2020. RealT tokenized the legal ownership of several houses in Detroit — starting with 9932 Marlowe. Owners of these tokens have access to liquidity through Uniswap, where they can always find a counterparty to buy out their stake in the home.

— starting with 9932 Marlowe. Owners of these tokens have access to liquidity through Uniswap, where they can always find a counterparty to buy out their stake in the home. Compound — already mentioned above in the lending section — launched cDai, a token that accrues interest. Products like cDai are collapsing the distinction between a “lending service you use” and “an asset you buy”.

Many synthetic assets depend on some kind of Oracle to report information. “Trustless” oracles are unsolved, and remain one of the hard problems in the cryptocurrency space.

👾 Ethereum’s gaming sector grows

In 2019, Ethereum’s gaming ecosystem showed early signs of growth.

One of the standout examples is Gods Unchained: a turn-based, collectible card game similar to Blizzard’s Hearthstone. The difference is that Gods Unchained cards are assets on Ethereum: they can be bought, sold, traded over DEXs, or even someday used as collateral.

In 2018, they sold $4 million worth of cards to the market, and this year they began “activating” those cards to be used in the game. This led to the largest number of transfers of “non-fungible” tokens (ERC-721s) in history:

In November, GU enabled open trading of the cards. Within a few days, more than $220K worth of cards had been traded on OpenSea, a popular marketplace for NFTs.

The other notable gaming launch was PoolTogether.

PoolTogether is a no-loss lottery system, made possible by Ethereum. It’s simple: players deposit DAI into a program running on Ethereum. That pool of money earns interest over time, by automatically lending it out on Compound. Then, at the end of the period, one player wins the earned interest (as of this writing: $688 every week). It is “no loss” because if you don’t win, you haven’t lost the price of your “ticket” since you can just withdraw your funds.

PoolTogether launched in June, and in the next six months its users won a total of $3,594. Over the same six month period, Tezos validators earned transaction fees totalling $3,745.

PoolTogether is especially notable as an indicator of a larger trend: financial applications that look like games, and games that look like finance. There has always been a space where these two realms collide — WoW, EVE Online, casinos, the stock market — but Ethereum lets us collapse the distinction entirely. Expect to see more entrants to this new category in 2020.

Also in 2019:

Skyweaver, an Ethereum-based card game launched their Beta in June and raised $3.75 million from investors.

Decentraland, a virtual world where property exists as an asset on Ethereum, readies for its public launch in early 2020.

Cryptokitties — the first breakout game on Ethereum — maintained its dominance, as Cryptokitties were still the most-transferred NFT on Ethereum.

👹 Decentralized Autonomous Organizations

Since the early days of Ethereum, people have dreamed of creating Decentralized Autonomous Organizations, or DAOs.

The idea is simple: Ethereum lets us write un-censorable code that executes on a distributed, decentralized platform. We could create a program that holds funds, and defines a governance process used to determine how to manage those funds. For instance, by defining a voting process.

Since the painful “The DAO” fork in 2016, the idea has been haunted by a mixed legacy. But in 2019, new projects revived interest in DAOs.

While 2019 did not become the “Year of the DAOs”, it did have at least a few “Months of Moloch”. MolochDAO, which launched in February 2019, is aimed at funding important public goods in the Ethereum ecosystem. Using money donated from several sources (like the Ethereum Foundation, Vitalik, Joe Lubin, and ConsenSys), the members of the MolochDAO vote on which projects to fund.

This simple model ended up being the DAO project that most captured the Ethereum community’s attention, and was echoed by several other efforts like MetaCartel and MarketingDAO. Ross Campbell began an effort to launch “LAOs”, or “Legal DAOs” that interoperate with traditional legal systems, influenced by the MolochDAO framework.

In another notable example of the value of Ethereum’s composable nature, Saint Fame — a “decentralized fashion house” DAO — launched their first product in December.

Saint fame issues tokens on Uniswap, which can later be redeemed for a specific product: a designer t-shirt. Trading the tokens openly on Uniswap lets the price of the t-shirt rise and fall in response to demand. Members of the DAO will vote on how funds are used to create new designs, which can then be sold through the same mechanism.

Saint Fame is built using Aragon — a comprehensive framework and toolkit for DAOs. Aragon itself saw early signs of adoption, and by the end of 2019 more than 900 DAOs had been created by the framework.

2. Ethereum nudges into the mainstream

In September, NBA player Spencer Dinwiddie announced plans to “tokenize” his contract. He would sell 90 Ethereum-based tokens, which would give the holder a portion of Spencer’s future contract value, plus interest. In exchange, he would receive $13.5 million out of his $34 million contract up-front.

The NBA initially opposed the move, claiming it breached Spencer’s contract with the league. But over the next few months, the plan was back on, set to launch in January 2020.

The most astonishing thing about this story is that in 2019, it didn’t seem out of the ordinary. If you had speculated in 2015 that within a few years an NBA player would be actually using Ethereum as a platform for financial innovation, no one would have taken you seriously.

But this year it happened — along with a lot of other small moves towards the mainstream:

Meanwhile in the enterprise world, the lines started to blur between “Enterprise Blockchain” and “Mainnet Ethereum”.

Mainstream enterprise corporations have realized that spinning up a private or consortium chain isn’t that different from a siloed, centralized database. But they’ve started to pursue an interest in mainnet Ethereum, which offers an open platform backed with billions of dollars of economic security.

One of the strongest proponents of mainnet for enterprise has been EY, who continued their work on “Nightfall”. Nightfall is a project that aims to enable enterprise to use Ethereum mainnet, while ensuring that the transactions are private and scalable — addressing two of the major concerns that limit enterprise use of Ethereum today. In December, EY launched v3 of Nightfall, bringing the transaction cost down to pennies instead of dollars.

Meanwhile, Microsoft continued its deep involvement with the Ethereum ecosystem. In May, Microsoft released the Azure Blockchain Development Kit, specifically to support Ethereum development. Visual Studio, Microsoft’s popular IDE, now supports Ethereum through an extension, fully integrated with Truffle. In June, they announced VeriSol, a formal verification tool for Ethereum.

In October, Microsoft joined with the Enterprise Ethereum Alliance to work on a tokenized incentive system for use within enterprise consortiums. And in November, Microsoft launched Azure Blockchain Tokens, a service that lets enterprises issue their own tokens onto Ethereum.

Many of these developments — in both consumer and enterprise contexts — might seem small. But together they paint a clear picture: even as general interest in cryptocurrency has slowed and flattened, Ethereum continues to reach outside the cryptocurrency industry, and is seeing early signs of adoption beyond the core community.

Also in 2019:

3. Ethereum 1.0 performance & sustainability

Every application we covered above — from the hundreds of millions of dollars in DeFi protocols, to trading cards, to enterprise applications — runs on today’s Ethereum protocol and today’s Ethereum clients.

This year, “Ethereum 1.0” and the clients that support it received some of the most significant upgrades since Ethereum’s homestead release in 2016. These changes began to address state growth, client sync times, client disk IO, transaction throughput, and issuance. In 2019, more EIPs were deployed than in any other year.

🏆 Geth

Geth, Ethereum’s dominant client, received major upgrades this year. In July the Geth team released v1.9.0, which included major performance improvements and many new features. This year, the Geth team reduced the time to fast-sync a full node by half to ~ 4 hours, and implemented a 10x reduction in disk IO.

The Geth team deserves extraordinary credit for continuously improving the majority client software powering Ethereum. While this work may not always receive the attention of a new breakout application or area of theoretical research, it is the work that makes Ethereum possible.

Have you thanked your Geth maintainers today?

⚙️ ETH 1.X

At Devcon4 in November 2018, a group of core developers began to talk informally about how to make Ethereum 1.0 more performant in state size, sync times, and disk IO. While the long-term goal is a migration to Eth2, Ethereum must remain sustainable until that time.

In the months after Devcon, this initiative became known as “ETH 1.X”. While many took this as an opportunity to push for a wide variety of ideas on how to change the EVM, fundamentally the core goal has always been sustainability through ideas like state rent, stateless clients, or repricing gas costs.

The results have been major improvements to Ethereum 1.0 across the board.

Ethereum’s maximum throughput increased from ~25 transactions per second, to ~38. This was achieved by increasing the block limit to 10mm gas, while block times were reduced to 13 seconds after the Istanbul hard-fork. EIP-2028 contributed to this improvement as well, by reducing the gas cost of a single byte in a tx input from 68 gas to 16 gas.

Client optimizations to Parity suggested by Alexey Akhunov made it possible to increase the block limit without a corresponding increase in the uncle rate. As a result, uncle rates plummeted in 2019.