The number of daily Ethereum transactions is almost five times that of Bitcoin.
Volumes in DeFi, especially NFT have grown tremendously this year.
Although bitcoin’s (BTC) market cap has dominated the cryptocurrency market since its inception, its dominance has dropped noticeably so far this year. ETH has appreciated 404% this year, compared to a 121% appreciation of BTC. These trends have fueled discussion about the possibility of ETH disputing BTC’s leadership, at a time when the second cryptocurrency is approaching 50% of bitcoin’s market value.
But beyond market value, another important criterion of comparison between these two major networks emerges, especially because of Ethereum’
s prominent role as the dominant ecosystem for decentralized finance (DeFi), utility tokens and, more recently, for non-fungible tokens or NFTs.
In terms of daily transactions, Ethereum’s superiority is notorious. The chart below shows that Ethereum surpassed Bitcoin
in the number of transactions at the beginning of July 2017, to reach an all-time high in May this year. By September 2, Ethereum recorded 4.75 times more transactions than Bitcoin. Source: Glassnode.
Although transactions on both networks have decreased since May this year, by last September 2, 1.16 million transactions were recorded on Ethereum and 244,953 transactions on Bitcoin. That is, Ethereum almost quintuples in transactions to Bitcoin.
Regarding the value transferred in both networks, in the last three months there have been similar volumes of around USD 10 billion per day, while, last May, Ethereum came to triple Bitcoin in the amount of daily transactions, reaching a maximum of USD 35 billion (average transactions in 7 days), as seen in the graph below.
At the time of writing this article, Bitcoin and Ethereum recorded similar volumes. Source: The Block.
The steady increase in Ethereum transactions may be related to the rise in popularity of NFTs, as well as the growing use of financialplatforms.
Bitcoin network activity has been declining despite the recent appreciation of its spot
price, not only in transactions and volume; there has also been a decline in derivatives volume, as seen in the chart below of monthly futures volume. Monthly bitcoin futures volume has declined since its peak last May. Source: The Block.
From a peak of USD 2.56 billion in futures volume in May this year, the average for the last 3 months is USD 1.76 billion, a 30% decline.
Activity on DeFi gives Ethereum the edge
Much of Ethereum’s superiority in the number of transactions comes from increased activity on DeFi and NFTs. Total volume blocked on DeFi is approaching USD 100 billion, according to DeFi Pulse, while blocked ETHs hit 4.74 million this September 3. BTC blocked on DeFi platforms reached 202,564 BTC.
The growth in blocked ETH could come from the rise of lending platforms like Defi, Aave, InstaDApp, and Compound. These are the top lending platforms, which are among the top four DeFi platforms. These three apps account for 71% of the locked ETH.
According to DappRadar, Ethereum remains the dominant blockchain in DeFi, in terms of value blocked. However, in Q2 2021, that network faced significant challenges from the Binance Smart Chain (BSC) and Polygon. The latter blockchain now partly hosts the important Aave and Curve
applications, first and third DeFi platforms in blocked value, respectively. Ethereum still holds more than 60% of DeFi’s total blocked value. Source: DappRadar.
In the following chart from Dune Analytics
, you can see the increasing trend of activity on DeFi over the past three months, despite the drop compared to May. <img width=”653″ height=”484″ src=”//www.w3.org/2000/svg’%20viewBox=’0%200%20653%20484’%3E%3C/svg%3E” alt=” /> Monthly volume of DeFi platforms. Source: Dune Analytics.
NFT momentum on Ethereum
The growth of non-fungible tokens’ traded volume has been explosive. In the month of August, the volume traded in NFTs grew to USD 5.29 billion, a 315% month-over-month increase, as shown in the chart below, and 1,103% over June.
August saw explosive growth in the NFT space. Source: DappRadar According
to DappRadar, the total market value of NFT tokens on Ethereum is USD 14.27 billion. With this valuation, the NFT market equals the market cap value of litecoin (LTC), at the 12th largest market cap cryptocurrency, according to CoinMarketCap, and would be above chainlink (LINK) and bitcoin cash
In relation to NFTs, games in the category called Play-to-Earn are also gaining a lot of importance, among which Axie Infinity stands out. This registered last August the record of 1 million active players per day, a fact reported by CryptoNews. In the last week, 128,000 traders
exchanged tokens of the game for a total of USD 146.272 million, according to DappRadar.
In the face of low bitcoin network activity, despite a moderate rebound in the price of BTC, Ethereum is perceived to be more buoyant, both due to its appreciation in the market, as well as growing activities focused on decentralized applications.
While bitcoin has been sideways below USD 50,000 in the last two weeks, ETH recorded a 25% boost in the last 4 days to surpass USD 4,000 this Friday the 3rd. In the last few hours, its price has retreated and is at USD 3,940 at the time of writing, as can be seen in the CryptoNews price calculator
Bitcoin has a clear role in front of investors, and that is to be considered as a store of value. Ethereum and ether (ETH), its native cryptocurrency, on the other hand, because of the various functions of this network, is seen <a href=”https://www.criptonoticias
.com/markets/5-narratives-ethereum-from-ethereum-digital-nation-ii/” target=”_blank” rel=”noopener”>under five different narratives, according to a study by Electric Capital, published by CryptoNews. These include Ethereum as a digital nation and as a payment network and the consideration of ETH as a productive financial asset.