- TVL on the Ethereum Mainnet has dropped by around 10%
- The number of daily active addresses has dropped by a fifth
Ethereum's Shanghai upgrade, which took place in April, has not had the impact on the world's biggest smart contract blockchain that many hoped for, JPMorgan wrote in a research report on Thursday, cited by CoinDesk.
“Disappointing” network activity
Ether gained less than 3% in the 24 hours directly preceding the upgrade and remained more or less flat thereafter. Network activity development has been “rather disappointing” according to the analysts. They wrote that this is the case despite sharp growth of staking and a declining supply of ether.
According to JPMorgan’s report, the total value locked (TVL) on the Ethereum Mainnet has dropped by around 10%. The number of daily active addresses has dropped by a fifth and Ethereum's daily transactions have declined by 12% since the Shanghai upgrade.
Bearish forces outweigh positive impact
The declining network activity indicates that the “bearish forces” in 2022, which include US regulatory crackdowns, the collapses of FTX and Terra, and a shrinking stablecoin market, have potentially outweighed the positive effects of the Shanghai upgrade, JPMorgan wrote.
The bank added that the share of Lido and other liquid staking protocols remains excessive, bringing up the issue of centralization, even though staking has increased by 50% since the upgrade.
The Merge also failed to make a splash
The Merge, which involved a transition from proof of work to proof of stake, took place in September 2022. The massive overhaul of the blockchain transformed the Ethereum Mainnet into a far more energy-efficient system, but transactions did not increase after it either.
EIP upgrade gives hope
While the continued bear market remains challenging, there is some hope of increase in Ethereum Mainnet activity with the upcoming EIP-4844 upgrade, JPMorgan concluded. The EIP (Ethereum Improvement Proposal) is planned for the final quarter of this year.
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