Bankless recently released their Q1 2022 State of Ethereum report. While the Bankless guys are generally Ethereum permabulls, I do find the data they amalgamate for the report quite useful in terms of tracking the adoption of Ethereum.
So, lets dive into some of the key findings from the report. I will be focusing the next couple Raptures on pulling insights from this report.
All of the following percentage increases are based on comparing Q1 2021 to Q1 2022.
In summary, network revenue increased, the Q1 2022 inflation rate was significantly lower than the Q1 2021 inflation rate, total ETH staked saw a dramatic increase, and active addresses also saw a slight increase.
Network revenue, which measures the value of transaction fees paid by network users, increased 46% from $1.6 billion for Q1 2021 t0 $2.4 billion for Q1 2022. Increasing revenue displays that more transactions are accruing on the network and/or users are willing to pay higher transaction fees to utilize Ethereum. Regardless, this revenue increase displays there is an ever increasing demand to utilize Ethereum.
Furthermore, $2.1 billion worth of ETH (87% of the Q2 2022 revenue) was removed from the circulating supply of Ethereum because of EIP-1559. In fact, the overall ETH inflation rate decreased 54% from 1.10% in Q1 2021 to .51% during Q1 2022 because of EIP-1559. The yearly inflation rate for Ethereum projecting out the Q1 2022 rate would be just over 2%. In reality, the actual inflation rate will likely be lower, considering no new ETH will hit circulation for months after the merge.
Additionally, average daily active addresses increased 4%, from 507,662 in Q1 2021 to 529,018 in Q1 2022. While an increase of 4% is positive, one might have thought this number would be higher, especially with the explosion of NFTs and Play to Earn apps. That being said, increase in L2 activity and sidechain activity could explain why this growth was relatively muted.
Finally, ETH staked rose 111% from 5.2 million to 10.9 million. Around 9.2% of the total ETH supply is currently staked on Ethereum. I expect this number to increase significantly post merge once staked ETH is naturally liquid.
Despite a relatively lackluster year for the price of DeFi tokens, TVL increased 82% from $49.1 billion in Q1 2021 to $89.5 billion in Q1 2022. Some of this TVL growth can likely be explained by the increase in value of assets like ETH, which comprises a significant amount of TVL.
Similar to TVL, the circulating supply of stablecoins also dramatically increased, rising 188% from $42.3 billion in Q1 2021 to $122.1 billion in Q2 2022.
Finally, DEX volumes saw the most growth out of any area of DeFi. Spot DEX volumes increased 667% from $513.4 billion in Q1 2021 to $3.9 trillion in Q1 2022. Perpetuals DEX volumes experienced more growth as a percentage, as perp DEX volumes rose 2,704% from $7.4 billion in Q1 2021 to $209.1 billion in Q1 2022.
The Content on this email is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this site constitutes a solicitation, recommendation, endorsement, or offer by Rapture Associates or Mattison Asher or any third party service provider to buy or sell any securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
All Content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content on the Site before making any decisions based on such information or other Content. In exchange for using the Site, you agree not to hold Rapture Associates, Mattison Asher, and its affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other Content made available to you through the Site.