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Active Ethereum Wallets drop by 40% in February

Photo of: Nathan VDH
by Nathan VDH

Even if gas costs on Ethereum seem to stabilize, the congestion of the last weeks would affect the activity on DeFi protocols. In one month, the number of active Ethereum wallets plunged by 40%.

In January, trading fees on the Ethereum blockchain were the joy of the miners. They achieved a record turnover of 830 million dollars. The costs alone amounted to $504 million.

The problem was that these gas fees were driving up the cost of operations on DeFi’s main protocols. “A Uniswap transaction costs $50 on average these days, and that’s just crazy,” one investor was alarmed.

Do these episodes of soaring costs explain the current slump in activity in decentralized finance? It is not excluded. In any case, DappRadar notes a plunge in the number of active Ethereum wallets.

Since mid-February, the number of active wallets is down by almost 40%. Clearly, a smaller number of investors are using their Ethereum portfolios to trade on DeFi protocols.

And this decline is particularly tangible for some of these protocols, such as Synthetix and Curve. They show declines of 10% and 15% respectively over the last 24 hours. Cointelegraph was already aware of this decline before DappRadar’s confirmation.

This translates into a drop in the total volume of daily transactions in the DeFi. Nevertheless, not all services are experiencing an equivalent trend. Uniswap, for which the UNI token is experiencing very strong interest, is on the contrary growing.

DappRadar’s indicators show that the number of users has increased by 22% over the last 30 days. Another DEX, 1inch, shows a 35% increase in the number of new users.

Can Ethereum’s trading fees alone explain this disengagement of investors? On competing blockchains, the activity is in any case not experiencing a comparable trend.

Binance Smart Chain is thus experiencing a growing popularity. BSC’s flagship DEX, PancakeSwap has recorded a jump of more than 200% in its user base over one month. A bad sign for Ethereum?

Some of Ethereum’s DeFi protocols are already interested in this alternative that is BSC. SushiSwap has recently integrated the Binance blockchain. And 1inch announces that it will join the movement soon.