Ethereum (ETH) blockchain’s average cost of sending a transaction declined by 82% from a September 2 highs of $11.61 to $2.09 on October 4. The fall might result from a slowdown in the hype around decentralized finance (DeFi) protocols.
Based on the data of Glassnode, Ethereumn miners have seen a corresponding steep decline in overall earnings from fees during the last three weeks. Last September 17, miners raked in 42,763 ETH or $14.97 million in fees. However, that tanked to only 5,898 ETH or $2.06 million on Sunday.
For the percentage of miners’ total revenue, fees plummeted to 29% from 69% during the same time. Costs have increased too high that on September 1, Ethereum miners made a record profit of more than $500,000 in an hour.
In August, miners made $113 million in profit, up by over 3,660% from the $3 million gained in April. The average transaction cost in April was only $0.09. But now ETH fees stayed excessively high, even with the current fall.
According to Glassnode, the total number of transactions on the Ethereum blockchain plunged to almost 30% to 935,000 on October 4. It fell from a 2020 high of 1.32 million three weeks before.
Moreover, analysts blame the spike in Ethereum transaction costs on the hype within the DeFi space. It has increased to a $9 billion industry within three months. Back in July, more than $3 billion of value was locked in the whole DeFi market, data from Defipulse shows.
Then, as DeFi protocols – like balancer (BAL), compound (COMP), curve.finance (CRV), uniswap (UNI), and yearn.finance (YFI) – fight for block space to receive transactions processed via the Ethereum network, fees skyrocketed.
As Etherscan mentioned, protocols such as Uniswap is one of the highest network utilizations – Tether (USDT), sushiswap, and YFI are the others. Recently, the hype seems to have eased somehow. Especially with major DeFi products declining within the range of 30% to 45% in the past week.
Ethereum developers are also testing technical solutions to decrease costs and enhance efficiency. And this includes a network upgrade called ETH 2.0. However, the project is still some months away from coming to fruition.
Ether price has stayed between the $340 to $350 range for the past month. At the same time, multiple on-chain metrics signal a recovery might be forming.
Cryptocurrency data analytics firm Santiment lately stated that the number of deposits to exchanges has been going down since the beginning of September. Also, the number of addresses used to send Ether to exchanges has seen a 53% decline since September 1.
Even if Ether’s sell pressure has been declining on exchanges, the number of new users on the network has been consistently growing.
Glassnode’s data shows that the number of addresses holding at least 0.01 Ether hit a new all-time high at 10,116,076.
Then, Crypto whales are also accumulating Ether at the current prices, hinting that they think the altcoin is underpriced.
Although it is difficult to affix an exact value to crypto assets because of the high levels of volatility, Ether has been a top performer in 2020. The altcoin still significantly outpaces the gains from Bitcoin (BTC).
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!
View original post