With the rise of Decentralized Finance in the crypto world, Ethereum has been experiencing a transaction volume reminiscent of 2018’s boom.
2018 saw Ethereum reach a record high in value and number of transactions as a result of the Initial Coin Offering (ICO) boom that year. As Ethereum’s 2.0 launch approaches, many investors are preparing themselves for the Stacking feature the upgrade will include by collecting Ether (ETH) and holding onto it.
Now, Decentralized Finance (DeFi) has experienced incredible growth and adoption in the last months amid the COVID-19 pandemic, despite the global economic downturn.
Most DeFi platforms run on the Ethereum network and are likely a reason behind the increasing activity and transaction volume which has resulted in the increase of gas prices and decreasing activity from sectors like Ethereum-powered gaming.
Ethereum transactions are ramping up
January 4th of 2018 saw the biggest number of transactions on the Ethereum network with a total of 1,349,890 transactions taking place, while on July 13th of 2020, the number of transactions was 1,151,834 according to Ether scan.
DeFi tokens represent 1.44% of the total of the crypto ecosystem, according to CryptoSlate with the sector value of tokens such as Compound, Aave, and Synthetix at around $455 million over the last few days.
The DeFi sector has become a fundamental driver for the Ethereum ecosystem as the increasing interest from investors is having a direct impact on ETH value and trading volume, with no indications of it stopping before the launch of Ethereum 2.0.
Ethereum’s high prices are affecting other niches
With gas prices increasing by the day as a result of the high demand experienced by the network, sectors like blockchain gaming have seen a decrease in activity as stated by the Blockchain Game Alliance in its last report.
The impact that a $5 fee has in small transactions resulting from gaming activity is far greater when compared to what those on a transaction for hundreds or thousands of dollars a DeFi operation can have.
Ethereum users are currently hoping that Ethereum 2.0 will result in a reduction of gas prices as applications and other platforms haven’t shown an interest in migrating to layer-2 solutions. For now, DeFi activity seems to be the thing to watch out when it comes to Ethereum’s success in the coming months as the network gets closer to its next release.