![]() The rapid rise of DeFi is also pushing a new wave of innovation. However, things could soon tip back towards a more even playing field. Source: Coin Metrics Network Data Pro The Next Layer Therefore high fees tip the scale towards whales and users who are transferring relatively large amounts, while making it harder to turn a profit investing small sums.Įthereum’s median transfer value has increased to hundreds of dollars since the rise of DeFi, signalling that the network is shifting towards larger players. Fees are not proportional to the amount of value transferred – sending $100 or $100K would cost the same amount of ETH in fees. This is a good sign for Ethereum, as network security is critical for the long-term health and success of the blockchain.īut high fees can also make it prohibitively expensive for some users to send transactions. Ethereum miner revenue hit new highs over the summer due to the rise in fees, and as a result Ethereum hash rate is climbing towards all-time highs. The fees are ultimately paid to miners, so high total fees create more incentive to secure the Ethereum blockchain. This can lead to escalating transaction fees as users compete to be first in line for a trade.ĮTH median transaction fee hit a new all-time high of $8.25 on September 2nd following the launch of SUSHI.īlockchain transaction fees are a double-edged sword. higher gas price) the higher likelihood that miners will prioritize the transaction, leading to a faster confirmation time. The higher transaction fee a user pays (i.e. Since Uniswap trades occur on-chain, a transaction fee must be paid each time a trade is made. As new tokens are launched, people race to get in early and trade them on Uniswap and other decentralized exchanges. The median ETH transaction fee shot up following the launch of YFI, YAM, SUSHI, and UNI. Whale SightingsĮthereum transaction fees have also changed dramatically, as high gas prices are becoming the new norm. As WBTC grows, hundreds of millions of dollars are effectively being transferred from Bitcoin into the Ethereum ecosystem, at least temporarily. WBTC can then be used in various DeFi apps like Uniswap and Curve Finance. WBTC is similar to WETH, except BTC is locked up in exchange for the WBTC ERC-20 token instead of ETH. Wrapped BTC (WBTC) supply has also been growing with DeFi. WETH supply has soared to new all-time highs following the launch of YFI. To create WETH, ETH is locked up into a smart contract in exchange for WETH tokens. But the ERC-20 token standard was introduced after ETH was launched, which means ETH itself does not abide by these standards. DeFi tokens are built on Ethereum’s ERC-20 token standard, which makes it easy to exchange one token for another. Wrapped ETH (WETH) is basically a way to use ETH as an ERC-20 token. But it also introduces more complexity, as DeFi smart contracts can interact with each other and automatically route tokens through multiple platforms.Īnother result of DEX growth is the rise of wrapped ETH. Tokens moving around the ecosystem are increasingly controlled by code, creating a whole new level of efficiency and opportunities for automation. With the rise of Uniswap and other DeFi dapps the amount of Ethereum smart contract calls hit new all-time highs over the summer. On-chain trading has quickly become one of Ethereum’s biggest use cases. This means that transactions must be sent and settled on Ethereum each time a Uniswap trade is made. Unlike centralized exchanges like Coinbase or Binance, Uniswap trading occurs entirely on-chain. Uniswap trading volume has increased from about $1M a day in early June to close to $1B a day in the beginning of September. Uniswap, the largest decentralized exchange (DEX) on Ethereum, has been the engine for DeFi token trading. The below chart shows ETH’s price following four of the largest DeFi token launches to date: YFI, YAM, SUSHI, and UNI. But there have also been some big collapses, like the rapid rise and fall of the YAM token. The start of ETH’s summer bull run coincided with the launch of yearn.finance’s governance token YFI. The rise of DeFi has brought on a wave of new tokens including some breakouts. In this piece we look at how four DeFi token launches affected Ethereum and how the network is evolving as a result. ![]() DeFi has pushed Ethereum to its limits but is also accelerating the pace of innovation and experimentation. A majority of decentralized finance (DeFi) apps have been built on Ethereum, and DeFi’s explosion has rippled across the network. Decentralized finance reached new heights over the last few months as dozens of projects launched and large amounts of capital flowed in.
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