Ethereum’s title as the most active blockchain network is becoming increasingly reinforced as network activity on the chain is now fully ahead of Bitcoin. Stablecoin and decentralized finance (DeFi) transactions continue to catapult Ethereum’s economic activity count but often at the expense of high gas costs leading to renewed clamor for Layer-2 (L2) solutions that could offer significant savings on fees.
Ethereum Settling $12B in Transactions Per Day
Tweeting on Tuesday (Jan. 19, 2021) Ryan Watkins, a researcher at Crypto research outfit Messari revealed that Ethereum’s daily transaction was in excess of $12 billion. This figure puts the second-ranked crypto by market capitalization at the pinnacle of blockchain activity, even exceeding Bitcoin’s commercial activity by more than $3 billion.
“Ethereum’s daily transaction volume is going parabolic. It now settles $12 billion in transactions daily – $3 billion more than Bitcoin. Imagine not being bullish $ETH.”
Ethereum's daily transaction volume is going parabolic.
It now settles $12 billion in transactions daily – $3 billion more than Bitcoin.
— Ryan Watkins (@RyanWatkins_) January 19, 2021
Since late June 2020, Ethereum had flipped Bitcoin as the blockchain settling the most transactions. This period coincided with the Summer 2020 DeFi boom that began with liquidity mining on DeFi protocols leading to increased levels of activity.
Indeed, DeFi and the need for decentralized exchanges (DEX) handling more volume has expanded the utility for Ethereum and by extension, its native token ETH. DEX volumes were on a tear for most of Q3 2020 with automated market makers like Uniswap accounting for the bulk of the transaction fees earned in the entire cryptocurrency market.
DeFi did experience a noticeable cooling off period in Q4 2020. Incessant rug pulling and other DeFi scams seemed to temporarily dampen enthusiasm in the novel sector. However, the market appears to be surging again on the back of the bullish crypto environment in play since Nov. 2020.
Apart from DeFi, the sheer volume of stablecoin activity has also boosted network activity on Ethereum. On the whole, this upswing in trading volume has led to instances of massive gas fees on the chain causing significant disruptions across the blockchain.
To mitigate the problem of high gas fees during periods of high network activity, stakeholders are calling for greater adoption of L-2 protocols. Solutions like zero-knowlegde rollups (zkRollups) are thought to hold the key to greater transaction throughput which could enhance Ethereum’s scalability.