Users of the Ethereum network are using it to perform various types of transactions based on trends, bringing this technology closer to the decentralized world computer than to unobjectionable electronic money.
The use of the Ethereum (ETH) Blockchain seems to evolve according to the trends of new technologies, favoring or limiting the risk according to the ETH price cycles. Users are currently moving away from DeFi and NFT related transactions, in favor of stablecoins.
Since the success of The Merge and Ethereum’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) on September 15, 2022, the price of Ether (ETH) has fallen $1,633 to $1,214, showing a decline of – 24.3% since The Merge, and -74.6% since the ATH of November 2021.
Beyond the fluctuations in the price of the ETH token and a purely financial aspect, the properties and uses of the Ethereum Blockchain have varied a lot lately with notable technological advances and the growth of many business sectors.
Ethereum Activity in the Bear Market
To measure the commitment of Ethereum network participants and their propensity to request it, the seven-day change in active addresses provides a relevant signal.
Overall, network activity as measured by this metric nearly halved during the bear cycle, indicating a loss of interest from investors and users in the Ethereum network. In addition, the number of transactions made daily can be measured, to obtain an alternative view of the activity of the participants, as well as their propensity to use the network.
After the weakening of activity from November 2021 to July 2022, the number of transactions seems to have stabilized since August 2022 in a range between 800,000 and 1,000,000 transactions per day. This could signal a return to a regime of reduced activity, symbolizing regular and loyal users of the Ethereum network, which is the basic demand for block space of the Blockchain.
Evolution of Ethereum Uses
In general, the fall in prices, the various setbacks of DeFi protocols and firms with significant links to this sector (Anchor hack, Terra/LUNA collapse, 3AC bankruptcy, then FTX), and the search for protection against risks, have caused a significant flight of capital, which is reflected in a tangible drop in activity.
Activity halved to 15.7%, demonstrating a contraction in NFT-related activity, as well as rapid disinterest during the latter phase of the current down cycle.
Finally, by looking at the use of the Ethereum network for peer-to-peer monetary settlement, through so-called “vanilla” transactions, we can assume that the ETH token is not ultimately intended to become a hard currency like bitcoin (BTC). Said usage demonstrates that ETH holders are using their token less to transfer monetary value across the network.
By Audy Castaneda