Ethereum activity regains five-month high as DeFi, smart contracts, stablecoin transfers peak

Ethereum’s on-chain activity continued to grow, extending to a five-month peak based on gas usage. The surge is driven by more DeFi interactions, smart contract activity, and stablecoin usage. 

Ethereum’s activity regained a five-month peak based on gas usage. Increased interest in DeFi and DEX trading, smart contract usage, and stablecoin transfers. ETH transfers have also increased, recently surpassing USDC transactions. 

ETH gas usage surged to new records, boosted by DeFi, stablecoin usage, and new smart contracts. | Source: Etherscan

Daily gas used jumped to a peak in the past three months and remains at a high level. Ethereum engagement with the L1 chain is also higher in the past few months, while L2 activity slowed down, based on Grow The Pie data.

L2s are still highly active in terms of revenues, taking up over 15% of the economic activity, while leaving Ethereum’s L1 with the bulk of liquidity. 

Ethereum daily active addresses also increased to around 550K daily, a slightly higher baseline. Usually, periods of increased ETH activity have coincided with bull markets, setting expectations for a re-test of previous ETH records. 

ETH gas is spent on smart contracts, stablecoins

One of the reasons for ETH traffic is the reasonably low price of gas. Despite the heightened activity, ETH has used L2 scaling to achieve lower costs. Currently, on the main network, DEX swaps are back down to $0.21, while gas prices are under one gWei. 

Tether remains the most active smart contract, followed by Circle. DeFi is the top category of gas burner apps, destroying 48 ETH per day based on the regular token burn rate. As the ETH’s popularity has grown, a phishing smart contract has also snuck into the ranks of the top 3 gas burners.

Additional activity comes from routers and aggregators, underscoring the increased demand for DEX trading and perpetual futures activity. Other sources of activity include incentives to forge an Ethereum Gas User identity by minting NFTs. 

ETH recovers above $4,000

Demand for DeFi, a growing supply of stablecoins and general attention for ETH helped the price recover to $4,164.23. ETH still expects a breakout to a higher price range, despite facing short-term turbulence for derivative traders. 

The coin also saw increased demand for DeFi based on the growing liquidity in lending protocols. Ethereum’s ecosystem holds over $89B in total value locked, with Aave locking in over $32B. 

Liquidatable ETH positions from lending have also doubled, up to $2.2B from their usual levels of $1B. Smaller loan positions start at the $3,600 range, while bigger positions are in the $1,800 per ETH range, with more accumulated just under $1,400. Previously, the bulk of loans was at below $1,000 per ETH, showing a lower taste for risk. 

The increased drive for lending and risk-taking shows a recovery after the October 10-11 market crash. ETH showed its resilience, with most of the liquidations on centralized markets. The quick recovery and growth of ETH activity showed the market is far from capitulating.

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