What does it mean for Ethereum 2.0 smart contract TVL to reach a record high?

The year 2022 is of great significance for Ethereum   . With the vigorous development of global DeFi projects and NFTs, the market value of Ethereum has grown rapidly from the previous high of 125 billion US dollars. Similarly, 2022 will be an extremely brilliant year for the NFT market around Ethereum. The popularity of the NFT market has greatly driven transactions on Ethereum. The decentralized exchange OpenSea alone has processed $13 billion worth of transactions. of NFT transactions.


Statistics show that last year, the total lock-up volume (TVL) on the Ethereum chain exceeded 150 billion US dollars, a year-on-year increase of about 750%. In addition, transaction activity on Ethereum has also grown rapidly, with an average daily transaction volume of about 1.5 million, a year-on-year increase of 35%; the number of daily active addresses is 600,000, a year-on-year increase of 40%.

At the same time, the data analysis company also compared the settlement amount of transactions made on Ethereum with top credit card companies such as Visa and Mastercard. The results show that the total amount of transaction settlement through Ethereum in 2021 will increase by 500% year-on-year to $7.7 trillion, of which stablecoins will account for 54%, reaching $4.2 trillion. This compares to $8.9 trillion (2020) of transactions settled through Visa and $4.7 trillion (2020) for Mastercard. Furthermore, Ethereum is far ahead by absolute advantage when compared to fintech giant PayPal’s $1.3 trillion (2021) settlement amount.

Ethereum 2.0 Smart Contract TVL Hits All-Time High, Yet ETH Faces Downtrend

As we all know, ETH is known as the king of altcoins in the current crypto market due to the sheer number of holders and supporters. At present, all kinds of negative news about ETH are overwhelming, but ETH holders have not shaken their position because of this, and still maintain firm confidence in the tokens they hold.

Still, the numbers don’t lie, ETH on centralized exchanges has dropped by nearly 2.56 million since January. And with the Fed’s announcement of the largest interest rate hike in nearly 20 years, market concerns are growing, so will ETH continue its downward trend?

In fact, ETH investors have been anticipating the upcoming “transfer from exchanges to smart contracts” since last year. Sure enough, the total lock-up of ETH in the Ethereum 2.0 smart contract hit a record high. According to on-chain data from the encryption analysis platform Glassnode, the total locked volume in Ethereum 2.0 smart contracts has reached 12,526,996 ETH, the highest level in history, which also means that the amount of ETH locked in Ethereum 2.0 smart contracts has exceeded 10% of the total supply.

While the price of ETH is falling at an alarming rate, there is no denying that the amount of ETH staked on the beacon chain has reached a new milestone. Although the current annualized rate of return of Ethereum 2.0 smart contracts is only 4.4%, which is far lower than the double-digit returns enjoyed by early Ethereum pledgers, the market demand is still huge, and investors are rushing to put their ETH on the exchange. Transferred to Ethereum 2.0 smart contracts. According to statistics from Ultrasonic.money, 2.27 million ETH have been destroyed so far, with a total value of about $6.25 billion.

What’s going on on Ethereum?

Unfortunately for investors, those bullish indicators did not have any impact on ETH price action this week, with ETH still down more than 7% in 24 hours and trading around $2,700. ETH holders were also hit hard, with the number of profitable addresses (7d MA) briefly dropping to 55,775,513.583, a one-month low. 


Data source for the above image: Glassnode

In fact, the number of daily active addresses also dropped by 3%. This shows that the frequency of investors participating in Ethereum activities has also begun to decline in the past week. And all these downward trends inevitably affect the enthusiasm of new players.


Data source for the above image: IntotheBlock

Not only that, but the data from ETH whale holders also reflects the current grim situation. That figure has dropped 50% this week, which means these whales are starting to sell more ETH than they buy.

YE6GiU6I883w4ZJuRbFT5g0vTkdj6K3Gs26AWEYm.jpegData source for the above figure: ITB

Although Ethereum’s recent performance has been somewhat negative, fortunately, institutional acceptance of ETH has not diminished. Recently, a real estate company said they accepted cryptocurrency (BTC or ETH) as a payment method when they sold a $6.5 million property in Greenwich, England.

Will Ethereum ” merge ” be the ultimate answer?

With the surge in transaction activity on Ethereum, some problems have gradually surfaced, especially the increase in transaction fees has brought a lot of challenges to Ethereum.

From 2020 to 2021, the average fee per transaction on Ethereum increased from $1.5 to $21.1. Some users have since opted to continue trading on Ethereum with high fees, while others have moved to “greener pastures” on the Lay1 alternative layer, which have the advantage of low transaction fees but are generally safe Sex is relatively poor. However, what the entire Ethereum community is looking forward to is that Ethereum is about to undergo a “Merge”, and the current consensus mechanism will be replaced with a more environmentally friendly, efficient and secure Proof of Stake (PoS) consensus mechanism.

In fact, as the first step in the entire upgrade plan, it is hoped that Ethereum can solve the problems of network congestion and high transaction fees through “merging”, hold on to the position, and no longer give up market share to lower cost and faster ones. competitor. Now, the time for “merger” seems to be getting closer, let’s wait and see.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-does-it-mean-for-ethereum-2-0-smart-contract-tvl-to-reach-a-record-high/
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