- Bearish conditions characterized the crypto market scene in Q2 2022.
- Among other effects, that situation led to a decline in Ethereum’s Network Revenue, which plunged by 33.4%.
- But the network also registered positives as the volume of staked ETH and NFT activity on the platform soared.
The Ethereum network revenue has fallen 33.4% in the second quarter of 2022. The figure, which was $1.91B in the first quarter of 2022, now stands at $1.28B. That's according to a BanklessTimes analysis. Again, the network burned $1.09B of those funds, effectively locking them out of circulation.
This drop is due to a weak crypto market. The prevailing bearish conditions have watered interest from crypto speculators. Consequently, transaction activity has gone down and with it the network's revenue.Jonathan Merry, BanklessTimes' CEO
Despite the drop in revenue, the Ethereum network continues to be one of the most active and popular blockchain networks. The network is home to many decentralized applications (dApps). Many enterprises are also using it for enterprise blockchain solutions.
Average Daily Active Addresses Dipped 20.6%
The average daily active addresses also fell from 593,404 to 471,447, a 20.6% decline. The decrease in trading activity could be linked to a drop in speculative interest among investors owing to the quarter's negative backdrop.
The number of active daily addresses is a good indicator of network usage and activity. A decrease in active daily addresses usually means less activity on the network and fewer people are using it.
However, it's important to note that the number of active daily addresses is just one metric. It could be declining while other metrics such as transaction volume are increasing. So this decline should not be interpreted as a sign that the Ethereum network is losing momentum or usage.
The Platform Lost 42% of its DeFi Total Value Locked(TVL)
DeFi TVL fell 42 percent — from $59.42 billion to $34.21 billion - during the same period. The key reason for this decrease is the decline in cryptocurrency prices throughout the quarter. Other reasons include liquidity outflows caused by reduced yields and a less risky attitude among Defi users.
Defi protocols offer yield-bearing opportunities for users to deposit digital assets and earn staking rewards. However, dropping yield rates in response to falling ETH prices discourage users from locking their funds in them. Instead, they (users) opt to cash out or move to more profitable opportunities.
ETH Staking Shot 116%
As of Q2 2022, investors had staked 12.98 million ETH on the Beacon Chain. This figure represents an increase of 116% from 6.01 million ETH at the beginning of the quarter. Users had staked roughly 11% of all ETH by the close of Q2.
While this is a significant amount, it's worth noting that Ethereum's eventual goal is to have 51% or more of all ETH coins staked. That will help ensure the security and stability of the network as it transitions to PoS.
The Beacon Chain is the central coordinating chain for Ethereum's long-awaited shift from Proof of Work (PoW) to Proof of Stake (PoS). This transition is designed to improve Ethereum's scalability and security, and it's been a long time in the making.
NFTs Remained Bullish
NFT marketplace volumes have exploded in the past year, growing 2439.2% from $509.36M to $12.93B. The rise is attributed to the secular growth of the NFT ecosystem, particularly the surge in popularity of NFT collections like PFPs, between Q2 2021 and Q2 2022.
As more people become aware of NFTs and their potential value, we can expect to see even more growth in the NFT marketplace in the years to come.