Ethereum remains the largest contract platform by market capitalization. Sitting in second place on the market leaderboard, the network hosts cutting-edge dapps.
While the Metaverse, games, and NFT functions have disappeared, DeFi is standing still, looking for a strong recovery in total value locked (TVL), according to DeFiLlama.
DeFi Leads Ethereum Gas Fees Generation
The dominance of DeFi in Ethereum continues to reflect the smart contracts and ledgers that have revolutionized finance. To confirm this position, especially looking at trends in gas fees and the main source over the years, DragonFly’s managing partner, took to X, shared data from CoinShares.
After the launch of Ethereum, CoinShares analysts note that gas fees continue to grow. There was a significant dip after the ICO mania of 2017 and 2018. Annual gas revenues generated went from $143 million in 2018 to less than $46 million in 2019.
However, after this shutdown, which came after the crypto winter of 2018, the gas funds generated exploded. The download momentum has been accompanied by the popularity of ERC-20 tokens, allowing protocols to issue tokens and the rise of DeFi adoption.
The resurgence of DeFi follows the launch of Uniswap, a decentralized exchange (DEX), in late 2018 and the launch of the automated market maker model (AMM), which decentralized the supply of funds. DEXs make up a large part of DeFi. Some of the most popular DeFi protocols, looking at DeFiLlama, are DEXs like Curve and Uniswap.
From 2018 to 2020, the network received its payments from ERC-20 transfers. However, with DeFi taking steam from Ethereum in the last bull cycle from 2021, most of the gas funds were coming from DEXs.
DEX Gas Costs Fall As ERC-20 And Stablecoin Transfers Grow, Suspect Dencun?
Interestingly, gas revenues from DEX continue to fall, dropping from $2.4 billion in 2021 to $512 billion from 2024. Meanwhile, from September 2024, the transfer of ERC-20 is in the second place, from the third, where it was from 2021 to 2021. 2023. Last year alone, the transfer of ERC-20, a respectable part from meme coins like PEPE and stablecoins, made 223 million dollars to verify.
Additionally, gas revenues from layer-2s continue to decline, according to the data. In 2023, Ethereum makes $247 million in payments from 2 platforms like Arbitrum and Optimism. According to CoinShares, it was $90 million at press time. The sharp decline is mainly due to Dencun’s performance.
Featured image from Canva, chart from TradingView