From the data to see how DeFi boosts the development of Ethereum
Editor's Note: This article comes fromEthereum enthusiasts (ID: ethfans)Editor's Note: This article comes from
Ethereum enthusiasts (ID: ethfans)
, author: Coin Metrics team, translation & proofreading: Min Min & A Jian, reprinted with authorization by Odaily.
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The Rise of Decentralized Exchanges
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- Source: Coin Metrics Reference Price -
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- Source: Uniswap.info -
With the rise of Uniswap and other applications, the number of calls to Ethereum smart contracts reached an all-time high this summer. Tokens circulating in the ecosystem are increasingly controlled by code, bringing new levels of efficiency and opportunity for automation. However, this also brings more complexity, as DeFi smart contracts can interact with each other and automatically transfer tokens through multiple platforms.
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Another manifestation of the rise of decentralized exchanges is the growth in the number of WETH (Wrapped ETH). Fundamentally, WETH is a way to wrap ETH into an ERC-20 token. DeFi tokens are built on a set of standards (ERC-20) that make token transactions easier. However, the ERC-20 token standard was introduced after ethereum was launched, which means that ethereum itself does not adhere to these standards. In order to create WETH, users must first lock ETH in a smart contract before they can be exchanged for WETH tokens.
After the YFI token was launched, the supply of WETH tokens hit an all-time high.
With the development of DeFi, the supply of WBTC (Wrapped BTC) is also growing. WBTC is similar to WETH, the only difference is that Bitcoin is locked instead of Ethereum. WBTC can be used in DeFi applications such as Uniswap and Curve Finance. With the development of WBTC, hundreds of millions of dollars worth of Bitcoin have been transferred to the Ethereum ecosystem, at least for now.
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Ethereum transaction fees have changed dramatically as high gas prices have become the new normal.
Median Ethereum transaction fees skyrocketed as YFI, YAM, SUSHI, and UNI tokens went live. Whenever new tokens come online, people rush to snag them and trade them on exchanges like Uniswap. Since Uniswap transactions are performed on-chain, transaction fees must be paid for each transaction. The higher the fee paid by the user (that is, the higher the gas price), the higher the possibility that the miner will package the transaction first, and the faster the transaction confirmation time will be. In order to reach a deal as soon as possible, users fought a transaction price war.
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- Source: Coin Metrics Network Data Pro -
Blockchain transaction fees are a double-edged sword. These transaction fees are eventually paid to miners, so higher transaction fees create an incentive for more people to secure the Ethereum blockchain. Ethereum miners’ revenues hit new highs over the summer due to rising transaction fees, pushing ethereum’s hash rate to new highs as well. This bodes well for Ethereum, as network security is critical to the long-term health and success of the blockchain.
- Source: Coin Metrics Network Data Pro -
Since the rise of DeFi, the median transaction value on Ethereum has increased to hundreds of dollars, indicating that the Ethereum network is shifting towards large players.
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- Source: Coin Metrics Network Data Pro -
Layer 2 expansion planChinese translationHowever, the Ethereum fee market will soon return to fairness. The rapid rise of DeFi is also triggering a new wave of innovation. Since the summer, the entire ethereum ecosystem has been grappling with some scalability issues that have caused transaction fees to be prohibitively high.
Last Friday, Ethereum achieved a major milestone in its quest for scalability: the launch of the Optimistic Ethereum testnet (
