Rapture #193: State of Ethereum Q1 2022 Part 1

Rapture #193: State of Ethereum Q1 2022 Part 1

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.

Ethereum protocol

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.


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