Delphi Digital analyst Alex Gedevani will help you analyze the development status of Ethereum’s network activities, DEX, stablecoin, lending, and derivative products, and gain an in-depth understanding of the current status of Ethereum’s ecological construction.
Written by: Alex Gedevani, analyst at Delphi Digital, a crypto asset research organization
The Ethereum network is full of flowers, and the bottleneck is obvious, which makes people love and hate deeply. On the one hand, concepts such as the DeFi boom and liquidity mining have pushed activities on the Ethereum network to an unprecedented level. But at the same time, the high gas cost also discourages small-capital users. New projects need to pay up to $ 15,000 in DAO deployment costs at the beginning of development, which is hindering the further development of DeFi and other Ethereum activities. Not to mention, although Layer 2 (Layer 2 network) is on the rise, the speed of adoption is not satisfactory.
The good news is that the number of queries Graph hosting services index data from the block chain project The, you can list the popular level DeFi: The Graph surge in the number of inquiries per day from 45 million times a day in August to 220 million per day in September Times or so.
Not to mention that new concepts, new experiments and new ideas continue to emerge in the Ethereum ecosystem. After the year.finance (YFI), the concept of ” fair start ” became popular, and governance tokens played a more important role in project incentive plans and other aspects. The continuous fermentation of DeFi hotspots has led to a DeFi fork frenzy. As a result, more and more fork projects and imitation projects have entered the game, and the ” uncle ” and ” vegetable ” series of related projects are emerging in an endless stream or promote the Uniswap token issuance process.
Interestingly, accompanied by DeFi wave in full swing, the center of the exchange (CEX) is also making every effort to fuse and compete with decentralized Exchange (DEX). For example, competing to launch DeFi tokens to compete for traffic, to cater to small capital users to launch DeFi mining , new currency mining and other products.
How can we better observe the development of the Ethereum ecosystem and understand the current trend and pulse of the magnificent Ethereum ecosystem development? Thanks to the research institution Delphi Digital recently released an in-depth report called ” Ethereum Ecological Sharing “, which can help us find out.
In this report, Delphi Digital analyst Alex Gedevani analyzes the development status of Ethereum ‘s network activities, DEX, stablecoins , lending, and derivative products to help readers have a deeper understanding of Ethereum ‘s ecosystem construction. In addition, as the launch of Phase 0 of Ethereum 2.0 is getting closer, the report also summarizes the latest developments of Ethereum 2.0 and the EIP 1559 proposal.
What to do if the gas fee is too high: Can EIP 1559 play a role in deflation?
Square Ethernet transaction costs are continuously rising, only the total transaction costs in the first half of September, Ethernet Square exceeded $ 100 million, up $ 103 million, which would easily surpass the entire month of August 1 total transaction costs (115 million USD). This also means that the recent Ethernet Square miners also earn pours, than the first half of September Bitcoin miner’s earnings of $ 16.3 million higher than 530%.
The income of Ethereum and Bitcoin miners, source: Delphi Digital
Can the cost burning in the Ethereum improvement proposal EIP 1559 proposed by the co-founder of Ethereum Vitalik Buterin and others play a role in deflation from the supply of coins? We can start by tracing back the historical cost data, to assume supply on EIP 1559 brings.
EIP 1559 Burning cost statistics
It can be seen that if EIP 1559 is implemented, even if it is destroyed at a cost of 75%, the destruction will only account for 0.83% of the supply.
Let the data speak: data analysis of the development of the Ethereum network
According to Etherscan data, in September, an average of about 209 smart contracts were verified daily, which exceeded the average high of 167 in July 2018.
In terms of the number of active addresses on the Ethereum network, the value was 332,000 in September, while it was 205,000 in January this year. It can be seen that compared to 2017, the current Ethereum network is healthier.
At the same time, the Ethernet network Square sustained in a highly congested state. The number of transactions in August reached 35.2 million , surpassing the historical high in 2018 (32.7 million).
Statistics of active addresses and transactions on the Ethereum network
In September, after seven days on average to adjust the Ethernet Square chain transfer value since 2018 for the first time in more than Bitcoin.
Comparison of the 7-day average adjusted transfer value of Bitcoin and Ethereum
In addition, the rapid development of DeFi has led to a substantial increase in Ethereum locked in smart contracts. Currently, about 15% of Ethereum’s supply is locked in smart contracts, while at the beginning of the year, the value was only 12.8%.
The amount of ETH locked up is expected to continue to grow
The endless stream of DApps also brings new opportunities to Ethereum. Yearn.finance’s yETH machine gun pool locked up 430,000 ETH within a few days of its launch. The yETH machine gun pool writes financial management strategies into smart contracts, which can be automatically operated by smart contracts.
Most importantly, we are about to usher in the ” Phase 0 ” of Ethereum 2.0, and we are expected to lock up millions of ETH in the first few months. This means that the Ethernet network utility Square is growing, will continue to drive increased demand for ETH. Signs of declining supply and strong demand are also gradually improving the prospects of Ethereum.
Obvious, ETH Lock value will continue to ensure strong growth, but the need to increase the supply of ETH publisher to verify the incentive remains to be seen.
Changes in the amount of ETH locked on DeFi
How ETH flows: look at the net outflow and distribution of ETH exchanges
Clear ETH exchange inflows and outflows as well as distribution, will help us better understand future trends in the price level.
More than 60% of the ETH supply has not been transferred for more than one year, which means that most investors are optimistic about the development and future of Ethereum.
In terms of exchange balances, according to Nansen data, 26% of the ETH supply is held by exchanges. Among them, Coinbase holds 8.9 million ETH, ranking first. However, as we know, as the DeFi field continues to prosper, this value shows a downward trend, which will effectively reduce the third-party risk of the exchange. With the arrival of Ethereum 2.0 Phase 0, the centralization of Ethereum on exchanges will cause investors’ concerns. This is because, if a third party is responsible for the majority of mortgage ETH, there may be some risk.
The number of ETH held by major exchanges
In addition, data from Santiment show this month, the biggest non-exchange ETH whales increased by nearly 84 per cent of positions, holdings increased to 5.8 million from 3.16 million.
Understand the latest developments of Ethereum 2.0 and EIP 1559 proposals
Summary of Ethereum 2.0 progress
- On September 15, the core developers of Ethereum 2.0 submitted a ” phase 0 ” upgrade proposal. “Phase 0” is expected to launch in the fourth quarter of this year.
- A new three-day testnet, Spadina, will run in parallel with Medalla later this month.
- The issue of ” clock synchronization ” on the Ethereum 2.0 testnet Medalla in August revealed the importance of client diversity. Currently, the Medalla testnet is progressing smoothly.
Ethereum 2.0 client developer comparison
The latest progress of the EIP 1559 proposal
- Can it transition correctly? This is one of the biggest risks faced by EIP 1559 .
- If most or purse Exchange 1559 does not support upgrading how?
- Columbia University professor Tim Roughgarden funded, Ethernet Square EIP-1559 will study the proposal, specific proposed changes will be analyzed cost mechanisms Square Ethernet protocol transactions.
It can be seen that the current ” Phase 0 ” preparations for Ethereum 2.0 are progressing smoothly, and client developers are also very active. In the layer (Layer 1) the increasingly competitive at the same time, developers are aware of the need to use an Ethernet bridge Square as obtaining liquidity.
Level of project developer activity
DeFi is exploding, what about DeFi?
The DeFi boom has prompted more and more imitating projects or fork projects to enter the game. To some extent, the current can not be developed if the ecosystem is compatible with DeFi other items of products, it is a waste of time. In addition, governance also plays an indispensable role in DeFi.
Obviously, in the near future, projects with incentive mechanisms will continue to attract a large number of users to participate. Specifically, we can see one or two from the transaction costs: in the past 30 days, the transaction costs of Uniswap and Balancer have reached a large proportion.
In addition, users can quickly measure the valuation of a project based on sales ratio (Price to Sales Ratio, P / S). In addition, the growth of the number of users of a project is also an indispensable evaluation indicator.
Given the nuances behind each protocol and cost structure, the user can try more comprehensive indicators to assess a project.
The agreement total annual trading volume (GMV) point of view, Uniswap ranked first, reaching $ 124.48 billion, far more than the second highest Curve (US $ 32.47 billion). For the loan agreement, GMV is the total loan amount, for DEX agreement, the total trading volume.
Agreement annual total transaction volume (30-day moving average * 365)
From the perspective of market sales ratio, the three DeFi agreements with the lowest market sales ratios are Bancor , Compound and Kyber , and the highest market sales ratios are MakerDAO and Curve . In traditional finance, Price to Sales (P/S) is a valuation indicator of stocks, calculated by dividing the company’s market value by the operating income of the previous fiscal year. The lower the market-sales ratio, the greater the investment value of the company’s stock. For the DeFi agreement, P/S = token market value / agreement annualized income .
Comparison of market-to-sales ratios of various DeFi agreements
In terms of number of users, Yearn Finance of the user scrolls the 30th highest growth rate of 202 percent, followed Balancer (115%) and Uniswap (60%). In addition, although Uniswap’s user growth rate ranks third, its number of users is the highest, exceeding 290,000 .
30-day rolling growth rate for users of DeFi projects
DEX overview
DEXs are coming fiercely, and DEXs led by Uniswap have attracted a large number of users and generated very considerable trading volume. In the past week, there were 76,000 independent traders on Uniswap, accounting for 92% of the total DEX users.
Comparison of DEX trading users in the past 7 days
In terms of transaction volume, in August, Uniswap had the highest transaction volume at US$ 6.729 billion , followed by Curve and Balancer, at US$1.867 billion and US$1.154 billion , respectively.
Comprehensive look at all DEX, first half of September, in addition to Swerve and Sushiswap projects such as bifurcation, DEX trading volume has exceeded the value in August.
Comparison of the trading volume of each DEX
In addition to the number of users and transaction volume performance, Uniswap market share surged from 23% in January of this year to nearly 70 percent this month.
Comparison of DEX market share
But it is worth noting that over the past 30 trading days Uniswap failure rate of up to about 22%. DEX common reason for failure of the transaction, including the transaction slip point more than expected, Gas Limit is set too low and so on. This means that the unfriendly user experience of DEX is becoming a major obstacle to its development and growth.
In the face of the rise of DEX, centralized exchanges are also doing their best to integrate and contend with DEX. For example, competing to launch DeFi tokens to compete for traffic, launch DeFi mining, new currency mining, and integrate some DeFi protocols to cater to small capital users.
Stablecoin overview
The market demand for stablecoins continues to soar. The total supply of stablecoins has increased from 6 billion USD at the beginning of the year to 18 billion USD at present , 70% of which are based on the Ethereum blockchain .
Changes in the total supply of stablecoins
The market value of the top ten stablecoins on the Ethereum chain
Stable money demand increase was mainly due to the following reasons: One is that more and more stable currency is used as a currency; the second is the stable currency at an unprecedented speed into DeFi field.
In terms of liquidity and convenience, Tether is still the most popular stablecoin . However, gas costs remain high leading to some of its Tether start USDT transfer from Ethernet Square block chain to the other layer of the network.
Loan agreement
Compound first open the liquidity of mining and mining borrowing, since been followed by other agreements completely ignited the liquidity mining.
Among the following five major lending agreements, Compound has the largest number of users, exceeding 50,000 , followed by Aave ( 23,500 ). In terms of total loan volume, Compound’s total outstanding loan value was US$727 million , ranking first, followed by Maker (US$604 million) and Aave (US$328 million).
The loan volume and user growth of each loan agreement in the past month
In the past month, Aave’s user base has grown the fastest, and its borrowing volume has also grown very strongly. Aave more than 65% of total borrowings from stable currency. It is worth noting that Cream Finance , ranked fourth, has experienced a growth rate of 640% in its borrowing volume in the past month.
In view of the lack of liquidity and stickiness of DeFi, the incentives of lending platforms will greatly affect users’ choices.
Derivatives
Since the beginning of the year, the open positions of ETH options have continuously made breakthroughs. The market believes that there is a 42% chance that ETH will reach US$400 or higher by the end of this year.
Year-to-date Ethereum options are the changes in platform positions, source: Skew
On the other hand, the DeFi derivatives market is constantly seeking development and innovation.
- Synthetix: In order to promote DeFi platform integration Synthetix, the project is the introduction of trading volume incentive plan, if integrated synthetic asset transactions will provide a certain percentage of rebate.
- Nexus Mutual: Effective sum assured Nexus Mutual is growing at 10 times the monthly rate of growth, now has an effective total insured amount of $ 246 million, locked to DeFi value ratio reached 2.7%. Currently, Nexus Mutual Insurance is studying the incentives to expand coverage and project cold start mining shield (shield mining) solutions.
- MCDEX: MCDEX for SNX, LEND three asset types and COMP to increase the sustainable contract market.
- UMA Protocol : In the latest product development, renBTC can be minted and locked into UMA to mint USD products, which in turn can be used to buy more renBTC and conduct leveraged transactions. The liquidity of its locked Ethereum and synthetic assets reached a peak of US$20 million.
Ethereum App
The DeFi community started a wave of forks. After Sushiswap “captured” a large amount of Uniswap’s liquid funds, the funds returned to Uniswap due to the reduction in the release of rewards and the issuance of UNI tokens . The past 24 hours, Uniswap trading volume was $ 520 million, transaction costs of liquidity providers is 0.3%, at the same time, Sushiswap trading volume of only $ 113 million, transaction costs of 0.25%.
This shows that the moat of the agreement is crucial. The fair launch highlights the pressing pressure for complete decentralization. More and more fork projects will appear in the future.
The number of tokens anchored to Bitcoin on the Ethereum chain has also achieved amazing growth, and the driving factors are inextricably linked to mobile mining. RenBTC , WBTC , etc. all benefit a lot from liquidity mining.
Alameda Research, a crypto market maker platform, previously minted as many as 65% of the Bitcoin anchor WBTC in August and September. On the other hand, the liquidity mining of Uniswap governance token UNI also includes the ETH/WBTC fund pool. The liquidity of the ETH/WBTC fund pool reached 240 million U.S. dollars within a few hours after its launch.
In just a few months, yearn.finance has gradually developed into an ecosystem that uses multiple products such as insurance and oracles. Its founder, Andre Cronje, is currently developing a decentralized credit protocol, StableCredit , which combines the risks of tokenized debt stablecoins , lending, AMM, and one-sided AMM to create a fully decentralized loan protocol that allows creation based on any asset Tokenized credit assets.
In summary, in addition to gas costs soar, network congestion outside the Square Ethernet ecosystem is healthy development. With the countdown to Phase 0 of Ethereum 2.0 and the continuation of the DeFi boom, Ethereum network activities and ecosystem are expected to further accelerate the development.
