Ethereum DeFi Activity Has Slowed Down to 2020 Levels. DeFi trading volumes and transaction numbers have really slowed down this month.
And this decline corresponds with DeFi token prices.
Also, the transaction fees are down as well.
Glassnode Reports on Ethereum
Following a recent report by Glassnode Insights, the transfer volume of Ethereum as measured in dollars. Has dropped down by 60 percent in 2 weeks.
That is not everything.
The analytic firm, referring to a paucity of queued transactions also said:
“By almost all on-chain activity metrics, the recent month has been a historically large decline. Transitioning rapidly from booming on-chain economies at (all-time-high) prices. To almost completely clear mem pools and waning demand for transactions and settlement”.
Also, Glassnode looked especially at governance tokens for 4 decentralized finance (DeFi) protocols. And this aims to enable people, borrow, lend and also trade cryptocurrencies without having to go through any financial intermediaries.
The number of transfers and the complete value of those transfers on Aave (AAVE). Yearn Finance (YFI), Compound (COMP), Uniswap (UNI) has significantly fallen since May.
Here is what Glassnode wrote:
“These metrics are simple yet reasonably effective. As a high-level gauge for mass investor sentiment and can be seen to map reasonably well to trends in price”.
Simply put as lower transaction demand correlates with lower price.
The Four Protocols
YFI price is indeed down 26% in the last month, Uniswap lost approximately 40% of its value, Aave has dropped by 27%. Whereas COMP is off a complete 55%. This report was according to data from Nomics.
However, most of the DeFi projects are probably not really concerned. The transaction volume to a baseline that was being established in the DeFi summer, Glassnode said. When the interest in Ethereum-based tokens started in mid-2020.
Following the reports from DeFi Plulzse. The dollar value of the tokens that are being locked into the above-mentioned 4 protocols is over $30 billion. And this is about two times the value of every DeFi protocol on the 1st of January.
Also, the prices are still up year-to-date. Let us take for instance UNI tokens. UNI tokens are worth over 300% than they actually were at the beginning of the year.
Well, if the liquidity in DeFi lending protocols, as well as exchanges. Still remains high, then trading can begin at a very low fee.
Ethereum Transaction fees as of 30th of May
The average Ethereum transaction fees on the 30th of May stayed at $4.82. Their lowest rate since the 1st of January. At their height on the 19th of May, the average fee was $71.72 as DeFi traders.
NFT buyers as well as those making use of protocols on the Ethereum blockchain. Tried pushing through transactions on the jampacked network.
Probably a few slow weeks isn’t a bad idea.
In all, the good news is that Ethereum transaction fees. Which have been growing bigger, are now down to 2020 levels back.
Whereas the bad news is that the demands for Ethereum. And the Ethereum-based DeFi protocols have really dropped, together with the prices. As evidenced partly by a 28 percent fall in Uniswap trades from a mid-May peak.