Ethereum continues to lead in the adoption of decentralized applications (DApps) in terms of transaction volume and deposits. While competitors like Solana and BNB Chain benefit from lower transaction fees, thereby boosting metrics like unique active addresses, well-funded entities have not been deterred from inflating Ethereum’s DApp numbers.
Activity on the Ethereum network has surged recently, contrary to broader crypto market trends and even conflicting with other usage metrics. While it’s impossible to confirm any manipulation, it’s worth noting that even with transaction fees as high as $2.4, numbers could be distorted, particularly in decentralized finance (DeFi) apps where deposits could exceed $1 billion.
It’s worth noting that Ethereum is the only network in the top 20 to report an 83% increase in transaction volume compared to the previous week, which is remarkable. Average transaction volumes on similar protocols like BNB Chain, Polygon, Solana, and TON have dropped by over 30%. Furthermore, Ethereum’s 475,980 addresses pale in comparison to BNB Chain’s 1.18 million and Solana’s 1.62 million addresses.
The significant increase in Ethereum’s transaction volume is not matched by a growth in user numbers. Using unique active addresses interacting with DApps as a metric, Ethereum saw an 8% decrease in user numbers compared to the previous week, which is contradictory given its substantial transaction volume increase.
Some may argue that despite fewer users due to relatively high fees, the growth in Ethereum deposits may offset the decline in activity.
Data shows that the total value locked in DeFi apps on Ethereum decreased by 17.5% in the past 7 days, while competitors like Solana and Avalanche successfully attracted deposits. During this period, DApp transaction numbers on the Ethereum network did not increase, indicating a need for deeper analysis to understand the anomaly.
The growth in Ethereum’s transaction volume is primarily driven by Balancer, which saw a 422% increase in 7 days, totaling $40.6 billion. For instance, this is 13 times the total activity volume on BNB Chain during the same period. However, the significant growth in Balancer’s transaction volume is not synchronized with improvements in other metrics; the DApp saw a 5% decrease in unique addresses and a 14% decrease in transaction volume within the same week.
Excluding Balancer’s contribution, Ethereum’s transaction volume actually decreased by 5% in the past 7 days, as this single DApp accounts for 59.5% of the network’s total transaction volume. While a DApp dominating a blockchain’s transaction volume is not uncommon — BNB Chain is predominantly driven by PancakeSwap, and Uniswap holds nearly 50% on the Polygon network — the reported activity growth on Ethereum should be viewed cautiously due to potentially skewed data from one DApp.
Identifying the true demand behind the surge in Balancer’s transaction volume poses a challenge. While some transactions within DApps may yield slim profits, this does not ultimately determine user intent. For example, Binance announced on July 1st that Balancer (BAL) token was listed on a potential delisting watch list, which may be related to the abnormal activity of the DApp, although establishing a direct link between these two events is complex.
Tags: Balancer, BNB Chain, Cointelegraph, DApp, Polygon, Solana, Ethereum, Jinse
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