Ethereum Dapp Volumes Rise 36% in a Week Eth Price Poised to Follow

Interactions with Ethereum DApps are surging, but ETH price remains stagnant. 

Source: nairametrics.com

ETH has risen 7.5% since falling to $2,396 on August 27 with a 22% drop over the past 30 days suggests ongoing investor uncertainty. Despite rising network activity on Ethereum, Ether's price has yet to recover the $3,800 levels reached in early June.

Weak Demand for Spot Ether ETFs Partially Accounts for ETH’s Recent Weakness

The situation is more troubling given that the altcoin market capitalization has dropped by 13% over the past 30 days, signaling that Ether has lagged behind its peers. This decline is partly due to inflated expectations around the anticipated launch of a spot exchange traded fund (ETF) in the US on July 24. However, it’s worth noting that Ether was trading at $3,200 as recently as April 24.

Ether bulls are pinning their hopes on the recent drop in Ethereum’s average transaction fee, which has fallen below $1 for the first time in four years. Coupled with the effective use of layer 2 solutions for projects requiring higher throughput, Ethereum’s dominance in decentralized applications (DApps) remains strong. Conversely, Ether bears argue that competing chains with lower base layer fees offer a more straightforward user experience for newcomers. Despite this, many users are not deterred by the higher centralization on Tron or the high costs associated with running a Solana validator.

Ethereum Network TVL and Transaction Volumes Are on the Rise

Ether's price is not necessarily reflecting the growth of its layer 2 ecosystem but the total value locked (TVL) on the Ethereum network is increasing. According to DefiLlama, the TVL in Ethereum DApps has risen to 18.9 million ETH, marking a 4% increase from two weeks ago. In contrast, Tron’s TVL dropped by 10% in TRX terms over the same period, and Avalanche’s deposits fell by 4%.

Symbiotic, a new staking project on Ethereum, experienced the most notable TVL growth in the past two weeks, with a substantial 83% increase to 640,310 ETH. Likewise, Ether.fi’s liquid staking protocol saw a 15% rise in total deposits. However, it's important to note that Ethereum’s network activity cannot be fully assessed by TVL alone, as many DApps do not rely on large deposit volumes. Regarding network activity, Ethereum’s DApp volumes surged by 36% between July 22 and July 29. This growth was largely driven by Uniswap, which saw a 35% increase in volume to $30.8 billion, and Balancer, with a 46% rise to $18.1 billion. In comparison, DApp volumes on the Solana network have remained stagnant at approximately $6.3 billion per week.

Falling Number of Active Addresses and Transactions

Not all aspects of Ethereum’s network activity have been positive since August 22. For instance, the number of active addresses interacting with DApps has remained unchanged, and the total number of transactions has dropped by 8%. In comparison, BNB Chain saw a 7% increase in active addresses, while Solana added 10% more users during the same period. Additionally, Ethereum's performance is being impacted by weak interest in spot Ether ETF funds, which have experienced net outflows of $107 million over the last two weeks, according to Farside Investors. This indicates a lack of enthusiasm from institutional investors, even as similar Bitcoin ETFs show strong momentum.

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