On-chain activity underwent a serious plunge in the second quarter. In addition to Bitcoin, Ethereum also faced dramatic slow-downs as active addresses and total transfer volume slid back to 2020 and early 2021 levels. In fact, Ethereum’s fall in terms of active addresses has been even larger than Bitcoin as the former depreciated by 30% from the brief peak of around 676k addresses.
According to the latest weekly report by blockchain intelligence platform Glassnode, ETH on-chain activity has now declined to 474k addresses per day. This level was last seen in the first quarter of 2021.
Over the past couple of months, the network blockchain was at the receiving end of some staunch criticisms and garnered stiff competition from its rival networks that targeted the age-long debate of high rates of congestion and transaction fees. However, a lot has changed in a short span of time.
Ethereum Transaction Fee Down
The analytics platform stated that the daily fee revenue for Ethereum miners has dropped by almost 90% from over 15k ETH per day in early May. Currently 1, the seven-day average now stood at 1.9k around $4.34 million. This represents around 10% of total miner revenue being sourced from transaction fees. Glassnode noted,
“We have to look as far back as June 2020, before ‘DeFi Summer’, to find similar levels of transaction fees paid.”
This was the beginning of the DeFi summer which was kickstarted by the popular lending protocol Compound’s launch of its COMP governance token. This was enough to boost demand for decentralized products that enabled the users to lend, borrow, or swap assets with each other without relying on intermediaries for the same like the traditional financial infrastructure. Ethereum has been the hub of DeFi protocols.
However, as the decentralized movement intensified so did the congestion and fees that drove up the need for alternatives. The latest drop in these levels depicted less activity on the Ethereum network. One of the primary driving forces of this could be the back-to-back crackdowns from Chinese authorities. Secondly, it could also be due to the emergence of various Proof-of-Stake [PoS] based platforms that are now housing the DeFi infrastructure.