Ethereum Leads Crypto Market Recovery In Q1 2023
A report by Messari has highlighted Ethereum’s dominant position in various financial and ecosystem metrics, solidifying its standing in decentralized applications (dapps) and smart contracts.
Soaring Market Cap
Despite a slight decline in network usage of around 2.5%, Ethereum remained resilient and surpassed its peers in several key indicators, according to the report. Notably, its market capitalization experienced an impressive quarter-on-quarter increase of 83%, outperforming other “layer-1” category cryptocurrencies.
Furthermore, Ethereum’s revenue from smart contracts, which encompasses all fees collected by the protocol, surged to $457 million in the first quarter of 2023, nearly 2.8 times the combined revenue of other featured competing layer-1 networks.
Ethereum’s leadership extends beyond financial metrics. When it comes to decentralized finance (DeFi), the platform leads in terms of total value locked (TVL) and transaction volume. Data from DeFiLlama indicates that Ethereum manages over $24.9 billion, more than half of the total DeFi TVL at the time of writing. Additionally, Ethereum maintained its dominance in the non-fungible token (NFT) market, accounting for the highest volume among all featured layer-1 networks, according to the Messari report.
Ethereum’s Validator Ecosystem
The report also emphasizes the importance of assessing a network’s viability and sustainability by considering inflation and deflationary pressures. Only Ethereum (ETH) and Binance Coin (BNB) exhibited deflationary tendencies, with their supplies decreasing by 0.2% and 5.4% respectively. This was primarily due to their mechanisms of burning a portion of transaction fees.
The implementation of EIP-1559 in Ethereum played a significant role in deflation. This protocol change resulted in a portion of the “Base fee” being burned instead of paid to validators. Since its implementation, 3,398,675.70 ETH has been burned and removed from circulation, according to UltraSound Money.
Ethereum’s strength is also reflected in its validator ecosystem. With a security budget totaling $32.6 billion, Ethereum has a substantial staked value compared to other proof-of-stake layer-1 networks. Despite stake-weight limits, Ethereum boasts a large number of validators, with 618,797 contributing to the network’s decentralization and security. As of June 18, on-chain data shows that 19,801,316 ETH has been staked, with an average stake per validator of 32.19 ETH.
