As a seasoned researcher with over two decades of experience in the ever-evolving world of cryptocurrencies and blockchain technology, I find myself intrigued by the recent developments surrounding Ethereum and its Grayscale Trust (ETHE). After witnessing Bitcoin’s meteoric rise following its conversion to a spot ETF, it’s fascinating to see a similar trend emerging for Ethereum.
On August 12, 2024, The Grayscale Ethereum Trust (ETHE) experienced its initial day without any net withdrawals. This change occurred after its transformation into a spot ETF on July 23. Interestingly, this event was accompanied by an uptick in on-chain activity within the Ethereum network, hinting at a possible shift for the fund that has been facing challenges.
From the very beginning, ETHE has encountered significant hurdles, experiencing a loss of approximately $2.3 billion worth of Ether – which equates to more than a quarter of its initial $9 billion assets. In stark contrast, it took Grayscale’s Bitcoin Trust (GBTC) nearly four months to reach a similar point without any outflows.
The cessation of ETHE outflows coincides with an increase in action across the Ethereum network and its second-layer technologies, potentially signaling a renewed faith among investors in the Ethereum infrastructure.
Ethereum DEXs Surge with Layer 2 Growth
According to DefiLlama’s data, there’s been a rise in trading activity on decentralized exchanges (DEXs) associated with Ethereum and its layer 2 platforms like Base. In the last 24 hours, these networks have noted a surge of approximately 12% and 11% respectively. Conversely, DEX trading volumes on Solana-based networks have dropped by about 10% within the same timeframe.
The expansion surpasses Decentralized Exchanges (DEXes). Notably, Uniswap, a prominent Ethereum-based DEX, set a new record by creating an unprecedented number of monthly addresses on layer-2 networks in July. According to Dune Analytics, an astounding 8.65 million new addresses were added, which is almost double the 4.93 million added in June.
As a long-time observer of the cryptocurrency market, I have witnessed firsthand the rapid growth and evolution of layer 2 solutions. My personal experiences have shown me that these solutions are increasingly attracting significant user bases. For instance, in a recent post on August 9th, crypto analyst Leon Waidmann highlighted the impressive numbers for two popular layer 2 platforms: Base and Arbitrum. Specifically, he noted that both platforms boast over 2 million weekly active users each, with Base having 2.64 million and Arbitrum boasting 1.37 million. These figures underscore the immense potential of layer 2 solutions and their ability to scale the cryptocurrency ecosystem in a way that is both efficient and user-friendly. I believe that as more users become aware of these platforms, we will continue to see an increase in adoption and growth within the crypto space.
On August 12th, data from L2Beat network activity showed that a total of 73 Ethereum layer 2 solutions handled approximately 298 transactions per second (TPS). However, this number is lower than the record high of 332 TPS set on July 18th, with the current figure standing at only 34 TPS.
The total value locked (TVL) across all Ethereum layer 2 solutions currently stands at $37.7 billion, showcasing their growing importance within the DeFi landscape. Ethereum’s mainnet still holds the larger share, with a TVL of $85 billion.
A Bullish Signal for Ether Price?
Multiple experts believe that the recent decrease in ETHE withdrawals could be a significant factor boosting Ether prices in the upcoming months. These experts suggest that Ether’s price trend might resemble Bitcoin’s after the approval of its exchange-traded funds (ETFs), which initially experienced outflows from GBTC.
Despite a rocky start, the increased activity on the Ethereum network lately presents an encouraging sign. Whether it will eventually lead to increased value for Ether in the long run is yet unclear, but there’s no denying the rise in investor attention towards it.
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2024-08-13 15:41