- Ethereum has seen massive growth in the fourth quarter of 2021 with Y-o-Y revenue growing a staggering 1,777 percent as staked ETH shot up nearly fivefold.
- Value locked on Ethereum DeFi platforms is up eightfold, but transaction fees have also shot up by 557 percent to average $26, up from $4.
2021 was a massive year for Ethereum as the project recorded growth in almost every other sector, from projects building on its infrastructure to revenue and daily active addresses. In the fourth quarter, this growth was at its highest and as ETH set a new record price at $4,860, its revenue shot up 17 times year-over-year.
In its State of Ethereum: Q4 Report, cryptocurrency media outlet Bankless documented this growth, looking at some of the key metrics such as revenue, inflation, transaction fees, staking and DeFi.
Companies issue quarterly reports. Protocols don't. So we did instead.
📑 The State of Ethereum | Q4 Report @BenGiove compares Q4'20 to Q4'21. The numbers are telling!
We're bullish on protocol & ecosystem growth. And we have the numbers to prove it.https://t.co/QWC1YSg1e3
— Bankless 🏴 (@BanklessHQ) January 13, 2022
Compared to Q4 2020, network revenue on Ethereum shot up a staggering 1,777 percent to $4.34 billion, up from just $231.4 million. For Ethereum, revenue refers to the transaction fees that users pay to use the platform. Most significantly, 87 percent of this, or $3.78 billion, was burned and removed from the circulating supply as a result of the EIP-1559’s deflationary mechanism.
Ethereum was also able to attract more users in Q4 last year, with the number of daily active addresses shooting up by 35 percent from 425,636 to 572,700. This is quite significant, perhaps even more than the revenue. Daily active addresses show the number of people who turn to Ethereum daily, be it for DeFi, NFTs, or simply exchange value. This number excludes people who buy and hodl as these are unlikely to access their wallets every day.
Ether holders also showed much more belief in the future of the network, with the amount of staked ETH up by 471 percent. In Q4 2020, there was 1,545,486 ETH staked, worth $5.1 billion at press time. The network ended the fourth quarter of 2021 with 8,818,933 ETH staked, worth $29.2 billion. This represents 7.3 percent of the total market cap which stands at $395 billion.
DeFi explosion boosts Ethereum in Q4
In 2021, the sector that gave Ethereum the biggest boost was DeFi. In Q4, the total value locked (TVL) shot up to $154.2 billion, up from $17.73 billion at a similar period a year prior, a 770 percent rise. Curve, with over $20 billion in TVL still holds on to the top rank in the DeFi ecosystem.
And it wasn’t just the TVL that grew. DeFi users were trading daily on these platforms. In Q4, trading volumes on decentralized exchanges such as Uniswap and Curve stood at $291.53 billion, up by 495 percent from $48.97 billion a year prior.
Bitcoin also continued to flood into the Ethereum ecosystem, with over 320,000 BTC now on the network as wrapped BTC (wBTC) renBTC, and tBTC.
NFTs also recorded a parabolic rise, with sales on OpenSea, one of the most popular NFT marketplaces, shooting up 50,000 percent.
There were drawbacks as well. One of them was the transaction fees charged to users which averaged $26.89, up from $4.09 a year prior, a 557 percent rise. However, Vitalik may have a plan to solve this challenge with his lastest proposal.