In the past two weeks, the price of Ethereum has been difficult to break through the $2,450 mark, and its DApp transaction volume has dropped by 17%, which has had a greater impact on the L2 ecosystem, causing investors to worry about whether it can hold the $2,250 support level. Fortunately, Ethereum still maintains its lead in total on-chain transaction volume and TVL, which has reduced investors' concerns to a certain extent.
Ethereum transaction fee surge dampens ether price rise
The decline in DApp transaction volume on the Ethereum network may have a negative impact on the market demand for ether, because the decline in transaction volume will lead to a decrease in transaction fees, or indicate that users have turned to other networks. At present, the main problem facing the Ethereum network is that its on-chain transaction costs are too high. Data shows that the average transaction fee for a single Ethereum transaction is currently $1.70. Although the L2 solution has alleviated this problem to a certain extent, L2 itself will bring additional complexity and security concerns to users, which will also have a certain impact on the development of the Ethereum network. From an investment perspective, the attractiveness of ether staking is declining, because the current 3.3% staking yield is much lower than the 4.6% return on the US 6-month Treasury bill. Data shows that only 28.5% of the ETH in circulation is currently staked, while Solana is 65.8%, Avalanche (AVAX) is 56.9%, and Cardano (ADA) is 62.7%. Therefore, Ethereum staking is no longer an important driver of capital inflows, and the incentive to participate in the verification process has also decreased. Although staking accounts for a large part of Ethereum's total locked value (TVL), other scenarios such as lending, trading, and synthetic assets also require locking ETH. Therefore, the small amount of ETH involved in staking does not mean that Ethereum has a bad outlook. It should be noted that in the TVL ranking, Ethereum is still far ahead with a total of US$44.15 billion, which is almost ten times that of BNB Chain or Solana. The 19% drop in weekly transaction volume of Ethereum DApps is very worrying. Compared with competitors, Solana's active DApps increased by 24% during the same period, and BNB Chain increased by 23%. This shows that the decline in Ethereum DApp activity does not represent an overall slowdown in the cryptocurrency market.
Some indicators of Ethereum show great resilience in the adverse trend
Over the past week, the transaction volume of major DApps in the Ethereum ecosystem has declined, with Uniswap trading volume down 18%, CoW Swap trading volume down 29%, and 1inch trading volume down 18%. In contrast, BNB Chain's Venus Protocol platform saw a 236% increase in trading volume over the same period, while TON network's Bemo liquid pledge DApp also saw a significant increase of about 54%. Between September 10 and September 17, Ethereum's leading L2 solutions Arbitrum One, Linea, Mantle, Immutable X, and Scroll saw a severe decline in trading volume, with transactions per second falling from about 119 to 94 during this period. Although transaction speed has declined, Ethereum's TVL has remained relatively stable, still maintaining around 18.9 million ETH. Similarly, the number of active addresses for Ethereum DApps remains at around 425,000, indicating that despite the network's decline in trading volume, there are no clear signs that investors are leaving the network. But what is worrying is that the amount of Ethereum held on centralized exchanges is increasing from 12.02 million to 12.24 million. This indicates that short-term traders are recharging Ether into exchanges and may sell it in the short term. The increase in selling pressure may affect the price of Ether. While the 17% drop in Ethereum DApp weekly transaction volume may be a cause for concern, it alone is unlikely to push Ethereum prices below the $2,250 support level, especially considering the stability of active users and TVL. Investors should continue to closely monitor the activity of the Ethereum network, but for now, this decline does not seem to pose an immediate risk.
