The Ethereum network has been overshadowed in this bull market due to high gas fees, the rise of the Solana ecosystem, and the emergence of meme coins. What is the current situation of Ethereum? This article will analyze it through four key data points.
(Background Summary:
Bitcoin and Ethereum ETF fund inflows in Hong Kong have remained at “zero for many days”, and netizens mock it as a joke.)
(Additional Background:
Bitcoin Layer 2 may be 100 times more expensive than Ethereum Layer 2, analysts say most BTC Layer 2 solutions cannot survive.)
Table of Contents:
1. On-chain gas fee median at a five-year low
2. Continuous inflation in Ethereum, with only 210 ETH burned last Saturday
3. Underperformance of Ethereum spot ETF after listing
4. The worst performance among the top 10 tokens by market capitalization
In this bull market, besides the Bitcoin spot ETF driving up Bitcoin and the overall cryptocurrency market, the most notable trend has been the “meme coin frenzy” led by the Solana ecosystem. However, Ethereum, which has traditionally not been absent from previous bull markets, has found itself in a lackluster position this time.
Originally, there was hope that the “Cancun upgrade” would bring a large number of new users to the Ethereum ecosystem, but contrary to expectations, the numerous Ethereum Layer 2 solutions have led to fragmented liquidity, resulting in issues such as on-chain ghost towns, prompting the community to deride the “Cancun upgrade” as better off being renamed to “Bumpy upgrade.”
Following this, no new narratives have emerged within the Ethereum ecosystem. What is Ethereum’s current situation? This article will analyze it through four data points.
According to data from Dune Analytics, the median gas fee for transactions on the Ethereum blockchain has dropped to its lowest point in nearly five years. On August 10, the median gas fee fell to 1.9 gwei, the lowest level since August 2019, a nearly 98% decrease from the high of 83.1 gwei observed in March.
Median gas fees on Ethereum over the past five years. Source: @hildobby
However, according to L2Beat data, in the past 30 days, the number of transactions on Ethereum Layer 2 Base reached 109 million, while transactions on Arbitrum totaled 58.04 million. In contrast, Ethereum itself only saw 33.52 million transactions.
Moreover, observing Base’s transaction data over the past year, there has been a significant increase in transaction numbers following the Cancun upgrade. Therefore, it can be inferred that Ethereum users may have shifted to interact on Layer 2 solutions such as Base and Arbitrum.
Additionally, according to a report from The Block, despite low gas fees, only 210 ETH were burned on the Ethereum network last Saturday (10), marking the lowest level of the year. In comparison, on August 5, when gas fees reached 100 gwei, the daily burn rate surged to 5,000 ETH.
Due to the long-term low gas fees, Ethereum’s inflation rate has consequently risen. According to data from The Block, despite the burning of 210 ETH on Saturday, the net issuance of ETH exceeded 2,100 ETH.
In light of the inflation trend, Gnosis founder Martin Köppelmann suggested temporarily raising the gas limit:
According to Sosovalue data, since the listing of the Ethereum spot ETF in the United States on July 23, there have been net outflows of funds for 9 out of 14 days, with recent consecutive days also showing net outflows.
Furthermore, the total net asset value of the Ethereum spot ETF currently stands at $7.28 billion, which is only 13.2% of the total net asset value of the Bitcoin spot ETF launched in January, which stood at $55.11 billion, falling short of the earlier conservative prediction of 15% by Mechanism Capital co-founder Andrew Kang.
Extended Reading:
Is the Ethereum spot ETF lacking momentum? Andrew Kang: Prices may drop to $2,400 after approval
On the other hand, according to Coingecko data, Ethereum has performed the worst in terms of price fluctuations over the past month, with a decline of 17.9%, ranking at the bottom. Although the Ethereum spot ETF was listed on the 23rd of last month, the price of Ethereum has not seen significant improvement, currently reported at $2,571.
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