The Ethereum network continues to maintain its lead in the adoption of decentralized applications (DApps) in terms of volumes and deposits. While other chains like Solana and BNB Chain enjoy the advantage of lower transaction fees, which contribute to metrics such as unique active addresses, there is no barrier preventing well-funded entities from artificially inflating the DApp volumes on Ethereum.
Recent activity on the Ethereum network has surged, standing out from the broader trends in the cryptocurrency market and even contradicting other usage metrics. Although it is challenging to verify any manipulation, it’s essential to acknowledge that even with a substantial $2.4 transaction fee, figures can be distorted, especially in decentralized finance (DeFi) applications where deposits can exceed $1 billion.
It is notable that Ethereum was the sole network among the top 20 to register a surge in volume, marking an impressive 83% growth compared to the previous week. In comparison, other protocols like BNB Chain, Polygon, Solana, and TON experienced an average volume decrease of over 30%. Furthermore, Ethereum’s 475,980 active addresses are significantly lower than BNB Chain’s 1.18 million and Solana’s 1.62 million.
Interestingly, the increase in Ethereum’s volume was not accompanied by a rise in user numbers. The number of unique active addresses interacting with DApps on Ethereum decreased by 8% compared to the previous week, which, while better than its competitors, is contradictory given its substantial volume increase.
One could argue that despite having fewer users due to relatively high fees, Ethereum’s growth in deposits might have offset the decline in activity.
Data reveals that Ethereum’s total value locked in DeFi applications decreased by 17.5% in seven days, while competitors like Solana and Avalanche managed to attract deposits. Additionally, the number of DApp transactions on the Ethereum network did not increase during this period of heightened volumes, indicating a need for a more comprehensive analysis to comprehend the anomaly.
The growth in Ethereum’s volume was primarily fueled by a remarkable 422% increase in Balancer over seven days, totaling an impressive $40.6 billion. For comparison, this is 13 times more than the total activity on BNB Chain during the same period. However, despite Balancer’s substantial volume surge, other metrics did not show corresponding improvements; the DApp experienced a 5% decrease in unique addresses and a 14% drop in transactions within the same week.
Excluding Balancer’s contribution, Ethereum’s volume growth over seven days actually declined by 5%, as this single DApp represented 59.5% of the entire network’s volume. While it is common for one DApp to dominate a blockchain’s volume—BNB Chain is heavily influenced by PancakeSwap, and Uniswap holds nearly a 50% share on the Polygon network—the reported growth in Ethereum’s activity should be approached with caution due to the distortion caused by one DApp’s data.
Understanding the underlying demand driving Balancer’s volume surge is complicated. Even if some trades within the DApp are marginally profitable, it does not definitively indicate user intent. For example, the Binance exchange declared on July 1 that the Balancer (BAL) token was placed on a watch list for potential delistings, which could be linked to the abnormal activity of the DApp, though establishing a direct connection between these events is complex.
This article does not offer investment advice or recommendations. Every investment and trading decision carries risks, and readers are advised to conduct their research before making any decisions.