Analysis
What's Going on with Ethereum?
ETH was supposed to take us to the promised land. The ETH ETFs would be approved, billions flow into it, and we all pop bottles together at the next conference.
But that didn't happen. ETH's price action has been disappointing for the past few years. Some people are blaming L2s while others are blaming it on Vitalik getting a girlfriend.
So, I wanted to take a look at how ETH by looking at the data.
ETH L1 Metrics: A Mixed Bag
According to IntoTheBlock, weekly gas fees on Ethereum recently hit their highest since June 10th.
Typically, rising gas fees signal increased activity on the network. But when you dig deeper, things start to look a bit murky:
- Daily Transactions: Around 33.9 million for September, which is on par with previous months.
- DEX Trading Volume: Slipped to $35.7 billion in September, down from $70.1 billion in March.
- Daily Active Addresses: For September, there were 339.5k active addresses—the lowest count for 2024.
- Total Value Locked (TVL): Stayed around $46 billion in September but has been sliding since June, mainly due to $ETH's price drop.
Here's where things get confusing. Gas fees are rising, but other key metrics are falling. What gives?
This apparent contradiction is because Ethereum has been exporting its users to rollups. As a result:
- User metrics, like active addresses on Ethereum's L1, are declining.
- However, rollups still settle their transactions on Ethereum, and they typically pay more in gas fees than regular transactions.
But this isn't necessarily a bad thing. For one, other L1s like Solana have been on a similar downtrend in recent months. Plus, this was Ethereum's plan since 2020. Ethereum isn't fighting Alt-L1s directly, it's using L2s for that.
Rollup Metrics: The Real Success Story
If you want to track rollup data, Growthepie and L2beat are the go-to sources. And the data tells a compelling story.
According to L2beat, there are now over 40 rollups, and if you include all L2s, it's over 100. Below is the chart of total active addresses across 21 rollups. In 2024, we can see a massive increase from ~989k to ~2.7 M. It grew in the last month as well.
Similarly, other metrics have also increased for those 21 rollups.
- Stablecoin Market Cap: Started at $3.6 billion on January 1st, 2024, and steadily grew to $10.2 billion — a 33.3% growth.
- Transaction Count: It started the year at ~5 M. Peaked at 17 million in August and currently stands at 11.6 million.
- Total Value Locked (TVL): Began at ~$22 billion in January 2024, peaked at ~$46.6 billion in June, and currently it's at $34 billion.
One of the biggest perks of rollups is that they allow unrelated teams worldwide to contribute to Ethereum's growth. In contrast, the growth of other L1s are more centralized.
Each of these rollup teams can then focus on different markets as well. For instance:
- Base is vying with Solana to become the top general-purpose chain. (We covered Base in last week's newsletter.)
- Celo recently overtook Tron in daily active addresses for stablecoin usage, though there's some debate about whether bots inflate these numbers.
But the key question is whether the rollup activity benefits $ETH price.
As of now, $ETH doesn't directly benefit from rollup activity. But once Ethereum tackles the fragmentation of L2s, we could see a significant boost in $ETH's value. That, however, might take a couple of years to fully realize.
In the meantime, L2s are steadily increasing the demand for $ETH, which is undeniably bullish.
Is TradFi Entering $ETH?
Apart from Rollups, ETH bulls are expecting major institutions to build on Ethereum as well. We already have BlackRock's fund on Ethereum. Recently, two more major financial institutions have made bullish announcements.
Visa is launching a platform on Ethereum that will allow banks to issue fiat-backed tokens. This is a major institution building a product that'll attract many more institutions to Ethereum. This is massive for RWA on ETH.
Guggenheim, a major investment firm, also issued $20 million of tokenized commercial paper on the Ethereum L1. If this trend continues, ETH L1 will be a platform for large institutional activity.
Also, there has been positive news from ETFs.
After the ETH ETF launch, it hadn't lived up to the expectation. Before last month, ETH ETFs had failed to enough attract inflows. But they recorded their second-best month ever in September, narrowly trailing behind August's performance.
Will $ETH pump soon?
In my opinion, it all depends on the broader crypto market sentiment. Right now, most of X seems bearish, and for good reason.
Geopolitical tensions are sky-high. There's talk of Israel and Iran heading to war, with missiles already being fired. Events like these usually push investors away from risky assets like crypto, and many expect the market to dip.
But I'm not so sure about that. Here's why I think we might actually be in for some bullish action:
- Historically, Q4 and October have been strong for crypto.
- Central banks are cutting rates. China is printing money, and the Fed is also hinting at more rate cuts.
- The U.S. election is just around the corner. Politicians aren't gonna let the market crash right before voters hit the polls.
My bags of ETH have been locked and loaded for several years. Now, I wait.
Sponsored By Coinshift
Tired of lazy stablecoins? Coinshift has the answer
What's the purpose of your stablecoins? Protect your portfolio? Earn some small yield?
What if you could have all this while also being eligible for several airdrops, frontrun a trending narrative, and get a juicy yield?
Enter Coinshift. The leading non-custodial smart wallet for RWAs. It's secure by design and built on SAFE smart accounts with over $100 billion in TVL.
They've partnered with Paxos International and Turtle Club to provide users easy access to USDL, a yield-bearing stablecoin, earning 5% APY.
But there's more. Just by holding USDL in Coinshift, you get:
- Coinshift Tiger points (launching soon!)
- Turtle airdrop
- SAFE airdrop (7th - 13th October)
I've used Coinshift myself (otherwise I wasn't going to share with you here). The UI is sleek and smooth, which is really cool for onboarding new users.
How to dive in?
- Head to coinshift.xyz and create an account
- Deposit USDC on Ethereum mainnet
- Swap USDC to USDL and start earning right away
Real-world assets are set to lead the next bull run. Are you going to sleep on it?
Tool Update
Is DEX Screener Selling Out?
DEX Screener has been the go-to tool for crypto traders for years. It's one of the tools I've used pretty much daily since I got into DeFi. But now, users are fed up and walking away.
What happened? A new feature happened: "Boost". And it has created a huge backlash.
Users can see trending projects on DEXscreener. Ideally, this ranking should be based on solid metrics like liquidity, trading volume, and the number of traders. But the new "Boost" feature has completely changed that.
With "Boosts," projects can buy their way up the trending charts. They can climb up without actually being...well, trendy. It's like buying overpowered gear in a game that's supposed to be skill-based. It ruins the competition for everyone else.
What's the problem with "Boosts"? For many, DEXscreener isn't just another trading platform. It's a tool for discovering hidden gems, especially in the memecoin and short-term trade world.
But with this "Boost" feature, finding genuinely good tokens became much harder. Right now, most of the tokens listed as "trending" are just boosted ones. It's turning into nothing more than an ad board.
This is especially dangerous for newcomers. Newbies often don't know these rankings are rigged. They just see the top projects and ape in, only to get burned when those projects dump on them.
At best, they lose money. At worst, they get rugged. And then they walk away thinking crypto is just one big scam.
The backlash against DEX Screener is growing. People are starting to call them greedy. They already charge a 0.5% fee on trades from their platform. On top of that, they launched a Pump.fun competitor called Moonshot.
While these aren't inherently bad, it does add to the narrative that they're getting too cash-grabby.
What's the alternative? Right now, GeckoTerminal is the best bet. It provides the same service as DEX Screener but without the annoying boosted projects, a.k.a. ads.
I replaced CoinMarketCap with CoinGecko a few years ago. It looks like I'll be doing the same thing here. If you're looking for a cleaner, more honest trading experience, here's the link.
🚀 DeFi Catalysts
Ethena introduced a new stablecoin: $UStb. It'll be a dollar-pegged stablecoin fully backed by $BUIDL from BlackRock.
Renzo Protocol introduced $ezEIGEN. It is an LST for Eigen token. that'll remove complexities and auto-compound rewards for users.
GnosisDAO rebranded again. The new identity claims to be more aligned with Gnosis 3.0 vision.
Ethena forum is discussing Ethereal, an integrated spot & perpetual futures DEX built on the upcoming Ethena Network as an L3.
Phantom released usernames to everyone. It is an ENS-like feature that should improve the user experience.
Hyperdrive expanded to Base. It gives users fixed rates or boosted variable yields underpinned by reputable yield sources like stETH and sDAI.
Spark Finance has updated the "Farms" feature. Users can now earn $SKY token rewards by depositing stablecoins on the platform.
Coinshift has released Coinshift Personal. Users can now securely access DeFi and RWA with smooth UX.
Dolomite has integrated Ondo Finance's $USDY on Arbitrum. It'll allow users to leverage $USDY for additional yield.
Ledger has added support for Scroll, the Ethereum zk rollup. You can now manage some assets on the L2 using the hardware wallet.
SUI bridge went live. It'll provide interoperability between Ethereum and Sui.
🪂 Airdrop Alpha
Sonic arcade is live. You can earn part of $S airdrop worth ~$130M without any cost or bridging. You just have to play games.
Galaxie is running quests programs from many projects including XAI, Movement, SynFutures, MagPie, and more.
Pencils Protocol has released the airdrop claim page for $DAPP. Users can claim directly onchain as well as through CEXs.
📰 Industry News
World Liberty Financial, Donald Trump's DeFi project, has opened the whitelist for accredited investors.
Robinhood and Revolut might launch their own stablecoins. This discussion from the TradFi institutions shows the growing significance of crypto.
Bedrock, a multi-asset liquid restaking protocol, was hacked for around $2 million. They now claim to have resolved the issue.
🚀 New Launches
Talus is an L1 blockchain for AI Agents. They've introduced Nexus, an onchain framework for building and managing AI agents.
Puffer Finance has launched UniFi AVS. It claims to unlock Ethereum's potential by solving the fragmentation issues.
Amulet Finance went live on Neutron in the Cosmos ecosystem. It allows users to get self-repaying loans on staked assets.
🐦⬛ X Hits
- Massive list of BTC-related airdrops.
- Sriram's take on $ETH vs $SOL.
- Vitalik's explanation of "Ethereum Alignment".
- Why are memecoins the hottest meta?
- North Korea has infiltrated major projects like Cosmos and Fantom.
😂 Meme
Until next time,
Edgy
p.s.
Today's email was written by Edgy and Yayya.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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