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Ethereum close to historic $1 TRILLION transactions

Photo of: Joseph Stone
by Joseph Stone

Ethereum is expected to become in 2020 the first public blockchain to reach $1 trillion in transactions processed. The network processes twice as many transactions daily as the Bitcoin blockchain.

The development of version 2 of Ethereum is not a long quiet river. Criticisms of the blockchain’s congestion are numerous, especially among decentralized financial players.

Nevertheless, Ethereum remains the reference public blockchain. According to Messari analysts, the network is on track to reach $1 trillion in transactions processed this year.

Ethereum takes advantage of the DeFi and stablecoins

On average over one month, Ethereum manages $7 billion in transaction volume per day. This is double that of another major public blockchain, namely Bitcoin ($3 billion). In two years, Ethereum’s growth has therefore been dazzling.

By way of comparison, the annual transaction volume in 2018 reached $504 billion. It, therefore, doubled between 2018 and 2020. Above all, the Ethereum blockchain is now clearly outperforming Bitcoin for the first time.

In 2020, the latter is expected to finish at $800 billion. That’s a little more than in 2019 ($772 billion). This explosion of Ethereum in terms of transactions is hardly a surprise. It is a direct result of DeFi’s jump.

The vast majority of operations carried out in the decentralized finance ecosystem are carried out using ERC-20 smart contracts, the Ethereum standard. However, this is not the only growth factor in the public blockchain.

According to Messari’s Ryan Watkins, a large part of the growth is due to the stablecoins based on the ERC-20. Indeed, the majority of Tether (USDT) transactions now take place on Ethereum. Demand for yield farming is also driving up the supply of MakerDAO’s DAI stablecoin.

Ethereum’s positions are not yet acquired, Messari warns: “The next twelve months could define the platform wars,” says his analyst. Ethereum is particularly affected by its transaction costs.

And competing blockchains are already rushing into the breach, like Solana and Avalanche. This battle could ultimately lead to the emergence of “parallel DeFi ecosystems”.