Ethereum’s fundamental strength has grown immensely throughout 2020. This growth has come about due to a major shift in the ETH ecosystem’s landscape, with the rise of decentralized finance driving immense usership to the platform.
One metric that shows just how heavily utilized ETH has become in recent times is its daily transaction count, which just surpassed 1 million for the first time since January of 2018.
It is important to note that this on-chain strength is different from that seen in years past. In 2017, for instance, the ICO mania caused Ethereum to see massive growth – but this was unsustainable and quickly faded.
This new growth appears to be far more practical due to the utility that many DeFi initiatives have, but the blockchain’s co-founder is skeptical of this emerging ecosystem.
Ethereum daily transaction count hits 1 million for the first time in years
In January of 2018 – near the peak of the historic bull run – Ethereum saw its transaction count rise to highs of over 1 million for the first time ever.
Many of these transactions were due to users rushing to purchase ICO tokens, with many projects fundraising using ETH while launching ERC-20 tokens.
It’s no secret how this trend ended, and the implementation of strict regulations within the U.S. and abroad halted the ICO craze in its track later that year.
The end of these token offerings coupled with the bearish market conditions seen throughout 2018 caused Ethereum’s transaction volume to sink.
Now, for the first time since then, ETH is once again seeing over 1 million daily transactions.
Analytics platform IntoTheBlock spoke about this within a recent blog post, explaining that the current network utilization is stemming from DeFi-based smart contracts being deployed on-chain.
“The last time Ethereum daily transactions surpassed one million, ETH’s price was at $1,033, over four times the current value… The current increase in transactions appears to be led by network usage from smart contracts deployed on top of the Ethereum blockchain.”
Vitalik Buterin remains skeptical about explosively popular DeFi trend
Despite seeming like a promising use-case, Ethereum’s co-founder – Vitalik Buterin – remains skeptical about the bourgeoning ecosystem.
In a recent tweet to his over 900k followers, Buterin noted that the lure of high returns from DeFi initiatives are likely either “temporary arbitrage opportunities” or come with “unstated risks attaches.”
“Honestly I think we emphasize flashy defi things that give you fancy high interest rates way too much. Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached.”
How the DeFi ecosystem evolves in the coming months should be telling as to whether or not it is just a short-term trend or if it is here to stay.