No matter how you measure it, Ethereum is the world’s most popular smart contract platform. Total value locked, transaction fee revenue or number of active wallets, Ethereum is number one and the project is well-positioned to hold onto its lead.
With the merge just a few months away, Ethereum stakers could potentially earn up to 10%! These high staking yields are expected to attract thousands of new investors to ETH.
And in other news, Aztec is a new protocol that’s bringing private transactions to Ethereum. Transacting anonymously could be another big incentive that drives corporate adoption of Ethereum in the coming years.
Check out our first monthly Ethereum round-up to find out more about high staking yields, private transactions and the most interesting finalists in the latest Ethereum hackathon event.
Bad news first, network revenue on Ethereum is down. Revenue was roughly $40 million a day at the start of 2022, which has dropped significantly to about $3 million a day as of the beginning of July.
The total value locked (TVL) in Ethereum’s DeFi applications is also down in dollar terms. At the start of 2022, there was about $145 billion in TVL on Ethereum. As of July 10th, 2022, there is just $48 billion in TVL. However, this doesn’t tell the full story. The collapse in TVL is due to falling crypto prices, not a mass failure of DeFi.
The stats for TVL measured by ETH deposits are far more encouraging. There is currently 43.4 million ETH locked up in Ethereum’s DeFi ecosystem, which is only slightly less than the all-time high of 46 million ETH in January of 2022.
The continued adoption of layer 2 scaling technologies is another promising development for Ethereum. According to L2beat.com we recently hit a record high ETH deposit rate in layer two protocols like Optimism and Arbitrum. On June 18th there were 3.68 million ETH deposited in layer two contracts, a new record!
Growth has been so robust that some protocols can’t even keep up. Arbitrum recently had to stop a promotion because too many people joined the network at one time. Many layer 2 scaling solutions are still in the development phase. Thankfully, capacity is expected to increase in the next 6 to 12 months.
Ethereum’s transition from proof of work to proof of stake is arguably going to be the biggest crypto event of 2022. The merge is just around the corner and although there've been many delays in the past, it appears that it’s going to happen in the next couple of months.
As of July 14th, 2022, just over 13 million ETH are staked on the beacon chain. That represents roughly 11% of ETH’s circulating supply. The average balance per validator is 33.65 ETH. Given that the initial deposit is 32 ETH, these numbers indicate that the average validator has already earned 1.65 ETH.
Ethereum currently has a market cap of $164 billion and every precaution is being taken to ensure that nothing goes wrong with the merge. So far, multiple testnets have completed the merge and the results have been very encouraging.
Recently the Sepolia testnet switched from proof of work to proof of stake. Apart from a few small “hiccups”, the event was a success.
Shadowforks are another way to test the merge. Developers can fork a small part of the active Ethereum network to simulate the merge under real-world conditions. Shadow fork 8, the latest iteration, was a success and the Ethereum developers are pleased with the progress.
Although something can always go wrong at the last minute, all signs indicate that the merge will happen sometime in Q3 or early Q4 of 2022. A full technical overview of the merge is available here.
One question that’s on everyone’s mind is: what will the staking yields be post-merge? Multiple firms have done an analysis on the potential outcome, and most findings suggest a yield of 8 to 9% for stakers. However, EthereumPools has estimated that yields could be as high as 15%. In either case, these are excellent yields considering that most people earn less than 1% in their savings account.
Want to keep track of Ethereum supply and issuance post-merge? Check out this awesome dashboard!
Hackathons are a chance for talented developers to meet up and create new projects on Ethereum. The following are three of the most exciting hackathon finalists from a recent event in New York.
- Pearl - A way for projects to send secure messages to users. I.e. an NFT project could send messages to everyone holding their NFT
- Guidl - Players can create a guild to share resources and set up community management of assets
- Burn My Wallet - Soulbound tokens cannot be transferred. Once a soulbound token is sent to a wallet, it must stay there. Burn My Wallet sends a soulbound token to a wallet that’s been hacked, permanently “burning” that wallet address
Two of Ethereum’s most promising projects
Private transactions are one of the key pieces of infrastructure missing from the Ethereum ecosystem. Nightfall has been gaining some traction, although it’s still far away from mass adoption. However, a new protocol might be even more promising on the privacy front.
Aztec uses zk-SNARKS to provide fast, private transactions on Ethereum. Here’s how the Aztec team describes their protocol: “Aztec Connect works like a VPN: by using Aztec’s rollup contract as a proxy, users interact with Ethereum services from within the Aztec network. Encrypted instructions are passed to Aztec’s rollup contract on Layer 1, which executes those commands. Aztec batches transactions, reducing user fees and enabling up to 100x cost savings over mainnet Ethereum.”
One of Aztec’s best features is that it doesn’t fragment liquidity. One of the problems with using Uniswap or any other DEX on a layer two scaling solution, is that there’s (typically) significantly less liquidity than on mainnent. Due to Aztec’s unique architecture, applications can share liquidity with the base layer. It’s hard to overstate the ramifications of that design, and how that feature alone gives Aztec a huge advantage over the competition.
And although it’s not a new project, Ethereum Name Service (ENS) has been gaining traction recently. 30,000 new addresses were registered on July 4th and 20,000 on July 7th. These adoption spikes during a bear market suggest that ENS’s prospects during the next bull market are excellent. If you want to register a domain name on Ethereum, now is probably the best time to do it!
How to buy Ethereum
You can buy Ethereum (ETH) and other cryptocurrencies in Exodus, in any way you prefer:
- Use a credit / debit card, bank account, or Apple Pay. The easiest payment gateway, Ramp or MoonPay, is chosen for you depending on your region and availability.
- Exchange Bitcoin and 200 other cryptocurrencies for Ethereum (ETH) using the built-in exchange app
- Link your Exodus wallet with the FTX exchange for even more options
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.