The second quarter of 2023 brought significant challenges for the Ethereum network, as its revenue experienced a sharp decline. Ethereum network revenue plummeted from $1.27 billion to $847 million during the second quarter, representing a staggering 33.3% drop.
Ethereum network revenue encompasses all transaction fees paid by users to Ether validators, as well as the part of the fees that are removed from circulation by burning.
Given this, the decline in revenue reflects the decline in overall activity on the platform, especially in the Decentralized Finance (DeFi) market, where developments have been far from welcome.
During the second quarter of 2023, the DeFi market faced a lean period, characterized by a lack of significant growth and unfavorable events. In particular, hack incidents in the DeFi sector increased by a staggering 63% during the quarter, resulting in losses of $228 million in 79 hacks. This was confirmed by Arltduv, a Crypto Directory in a Twitter Publication of July 20, 2023.
These incidents have negatively impacted user trust and contributed to the decline in total value locked (TVL) in DeFi protocols, with Ether-based protocols accounting for more than 90% of total TVL.
Decrease in Ethereum daily active addresses
In addition to the revenue decline, Ethereum daily active addresses saw a notable 6% drop during Q2 2023. The metric measures the number of unique wallet addresses that have transacted on the Ether blockchain per day during the quarter. Despite the ongoing bear market, the decline in daily active addresses has not worsened significantly, indicating a level of resilience in user activity.
ETH price resting at $1,891 | Source: ETHUSD on Tradingview.com
Ethereum’s performance during the second quarter suggests that while it faced challenges in network revenue and daily user engagement, the platform remains a key player in the DeFi space. Ongoing efforts to improve the usability and scalability of the network are crucial to attract a broader user base, as evidenced by the recent proposal from Ethereum co-founder Vitalik Buterin.
ETH is still the king of DeFi
Despite declining daily users and revenue from the network, Ethereum has managed to maintain its place as the leading blockchain when it comes to DeFi activity. the network currently accounts for more than 50% of Total Value Locked (TVL) across all blockchains, making it a leader in this regard.
Layer 2 blockchains like Arbitrum and Polyon built on top of the Ethereum network are also doing incredibly well. Arbitrum is currently sitting at $2.649 billion in TVL, with Polygon trailing at $1.044 billion in TVL.
In terms of price, ETH is still closely tracking the performance of Bitcoin. The altcoin is trading at $1,892 at the time of writing, with a meager gain of 0.07% in the past day.
Featured Image from Yahoo Finance, Chart from Tradingview.com
