What is the most popular on the Ethereum network. DeFi, NFT, stabilcoins or something else?

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What is the most popular on the Ethereum network.  DeFi, NFT, stabilcoins or something else?Ethereum (ETH) is a decentralized cryptocurrency platform and therefore it is not just a special application, but has a number of different solutions. In recent years, we have witnessed the emergence of new uses, including decentralized finance (DeFI) and non-exchangeable tokens (NFT). However, which branch of Ethereum is the most popular part of the whole blockchain? We are looking for the answer in this article

Ethereum’s popularity is measured by gas, not the number of transactions

In a recent analysis of the Glassnode Ethereum network, it compares individual branches of the ETH ecosystem in terms of the cost of transactions, rather than just the number of transactions. So why is it more difficult and less intuitive to bet?

– The capacity of the Ethereum platform is limited by the number of gas units available in the block. As usage cases compete for a limited block space, it is crucial to gain the ability to provide fairly high payouts, and losers are effectively removed from the platform. – Explains Glassnode in the introduction to the analysis.

Because the gas market is highly competitive, gas costs are an indicator of user demand and the economic value that users attribute to a particular use case or protocol. It should be noted that the reduction in the share of gas can still imply increased costs in fiat currencies or ETH, and vice versa – for this must be referred to the relevant absolute fees. However, in this article, we focus only on the share of gas, as the aim is to compare the relative advantages of use in the Ethereum ecosystem.

To do this, Glassnode chooses “gas share” instead of “number of transactions” because it represents the real economic value for the user and is therefore more difficult to manipulate. It is easier to artificially increase the number of transactions, especially in times of low network density.

There are two types of accounts on the Ethereum platform: private accounts managed by private keys (EOA) and contract accounts managed by a contract code.

“We have deliberately decided to assign all gas in operation to the initial EOA call, as this represents a user-driven requirement. The inclusion of internal operations, while relevant, will give a different picture Glassnode comments.

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ERC20, stabilcoins, DeFi, bridges, NFT, etc. What is considered in the Ethereum network?

The graph below shows the relative gas consumption of all transactions recorded in the Ethereum blockchain so far and is divided by the most commonly used cases. Seven different categories were meaningful enough to be worthy of the show, and the importance of two of them (Bridges, MEV bots) only increased last year.

What is the most popular on the Ethereum network.  DeFi, NFT, stabilcoins or something else?
A historical change in the importance of individual branches of the Ethereum ecosystem. Source: Glassnode

A more detailed description of each of them is given below:

  • Vanilla: Pure Ether transfers between EOAs without calling a contract.
  • Stabilcoins: Convertible tokens whose value is associated with non-chain assets by the issuer or algorithm. Most of them are related to the US dollar. This category includes more than 150 stablecoins, the most important of which are USDT, USDC, UST, BUSD and DAI.
  • ERC20: In this article, all ERC20 contracts that do not have a fixed currency fall into this category.
  • DeFi: Chain financial instruments and protocols implemented as smart contracts, usually without traditional intermediaries. Today, the most popular of these are decentralized exchanges (DEX), peer-to-peer platforms for trademarks. This category includes more than 90 DeFi protocols such as Uniswap, Etherdelta, 1inch, Sushiswap, Aave and 0x.
  • Bridges (From English bridges): Agreements that allow the transfer of tokens between different blockchains. More than 50 bridges such as Ronin, Polygon, Optimism and Arbitrum are included in this category.
  • NFT: Unique identifiable pieces of information that can be stored and transmitted in a chain. This category includes both token agreement standards (ERC721, ERC1155) and commercially available NFT markets (OpenSea, LooksRare, Rarible, SuperRare).
  • MEV bots: Miner Extractable Value (MEV) bots perform operations for profit by rearranging, inserting and censoring operations into blocks.
  • other: This category includes all transactions that do not fall into the categories listed above. Examples include multi-signature exchanges, centralized credit platforms, and gambling sites.

– In terms of quality, today’s distribution of use is significantly different from two years ago, and the share of each of the above categories has changed dramatically. We believe that this highlights the evolutionary nature of the platform and the dynamic research framework needed to assess it – it would be a mistake to assume that Ethereum in 2022 will be Ethereum in 2019. Glassnode explains.

As can be seen from the data, there are no signs of stabilization – in 2024, Ethereum can be expected to be used in a completely different way than today. Each of the above seven elements will be discussed in detail in the next article in the series.

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