Ethereum (ETH) Supply and DeFi Ecosystem Surge Amid Decline in Active Addresses

• Ethereum’s supply increased significantly last month.
• This surge can be attributed to a drop in daily active addresses on the platform.
• According to data, 46,138 Ether (ETH) worth approximately $176.22 million were added to circulation over the past month, boosting the circulating supply to a 30-day peak of 120.14 million ETH.

Discover why Ethereum’s supply is on the rise and what this means for the network’s future dynamics.

Ethereum Supply Surge: Analyzing the Implications

Recent data reveals an upward trend in Ethereum’s circulating supply, indicating an inflationary state for the cryptocurrency. This phenomenon is typically linked to reduced activity on the network. During the last month, the number of new ETH coins added to circulation reached a sizeable amount, thereby pushing the total supply to a new monthly high.

Decline in Daily Active Addresses

Notably, the drop in user activity on the Ethereum blockchain has been a crucial factor in this supply increase. On-chain data from Artemis highlights a significant decrease in daily active addresses, falling from 421,000 on May 8th to 361,200 by June 5th. This 14% reduction marks a stark contrast in network engagement. Furthermore, the daily active address count plummeted to a three-month low of 326,200 on June 2nd, a level last observed in early February.

Effects on Transaction Fees Despite Reduced Activity

Interestingly, despite the reduction in active addresses, transaction fees on the Ethereum network have escalated. Boosted by a 25% rise in ETH’s value, the total transaction fees reached $10 million on June 5th, the highest since April 13th. This anomaly underscores a complex interplay between user activity and network economics, where fewer users do not necessarily equate to lower transaction costs.

A Look at Ethereum’s DeFi and NFT Verticals

While Ethereum’s user base dwindled, its DeFi sector experienced robust growth. The total value locked (TVL) in DeFi protocols on Ethereum surged by 25.38% over the past month, positioning Ethereum as the second-largest blockchain by TVL, following only Arbitrum. At the time of writing, Ethereum’s TVL stood at $66.33 billion, hitting a year-to-date high.

NFT Sector Performance

Contrarily, Ethereum’s NFT sector did not fare as well. According to CryptoSlam, NFT sales volume on the Ethereum blockchain dropped by 56% in the last 30 days. This diverging trend between DeFi growth and NFT decline presents an interesting dynamic within the Ethereum ecosystem, suggesting shifting user preferences and investment patterns.

Conclusion

In summary, Ethereum’s circulating supply has seen a notable increase due to a decrease in daily active addresses. Despite this decline in user activity, transaction fees on the network have risen, driven by the recent appreciation in ETH’s value. While the DeFi sector on Ethereum demonstrates remarkable growth, the NFT market shows a contrasting downturn. These developments underline the multifaceted nature of Ethereum’s ecosystem and hint at evolving trends within the cryptocurrency space.