Key Points
The Ethereum ecosystem has witnessed a significant increase in network activity. Dune Analytics reports that, excluding Ordinals-related addresses, there are over 10 million wallets actively engaged with the mainnet and Ethereum layer-2 solutions like Base, Optimism, and Arbitrum.
Impact of Dencun Upgrade
This growth is attributed to the successful implementation of the Dencun Upgrade in mid-March 2024. The upgrade, one of several planned for Ethereum, has effectively tackled pressing issues, particularly those related to scalability and gas fees.
The number of active wallets connecting to various protocols deployed on the mainnet, sidechain, or off-chain rails has surged. An analyst on X is optimistic, predicting that this number will grow from 10 million to 100 million in the upcoming bull cycle. This increase is expected to be partly driven by the enhancements brought by Dencun, which made layer-2 transactions using rollups cheaper.
Dencun uses “blobs,” a new transaction type, to store data not processed by the Ethereum Virtual Machine (EVM). These blobs serve as new data storage channels within a block, helping to streamline block verification. Importantly, this is achieved without compromising data availability, greatly benefiting Ethereum layer-2 solutions integrating Dencun.
Growth in Total Value Locked
Thanks to lower gas fees and more efficient layer-2 platforms, Dencun has attracted new users, revitalizing the broader Ethereum ecosystem. This is reflected in the increasing total value locked (TVL) across layer-2 portals and the mainnet.
According to L2Beat, top layer-2 platforms like Arbitrum and Optimism have seen double-digit increases in the past week. Currently, all layer-2 platforms manage over $39 billion in assets. Similarly, data from DefiLlama highlights this growth, showing that over the last six months, the TVL of leading decentralized finance (DeFi) protocols has grown from around $20 billion to over $54 billion.
However, Ethereum still faces challenges. It is fragile and can’t scale efficiently during usage spikes, suggesting that gas fees may rise in the next bull run, especially if ETH prices rally, breaking above $4,000 and all-time highs.
Furthermore, users, particularly meme coin deployers, could opt for alternatives like Solana or Avalanche, which could reduce activity.
Despite these challenges, Ethereum supporters remain optimistic. As crypto prices stabilize and likely align with Q1 2024 gains, more users are expected to explore top protocols launched on the mainnet or via layer-2 platforms.
