Quarter of All ETH Is Locked in Smart Contracts

Over 3,000 dApps are currently running on Ethereum, highlighting its unparalleled usability.

  • Ethereum gas prices have reached a six-month low as users exit the platform.
  • Vitalik Buterin has announced that Ethereum 2.0 will be delayed.
  • Layer 2 solutions like Polygon are a new development in the cryptocurrency space.

Outpacing competition in an ever-changing, innovative field is a prerequisite for those aiming to establish a technological reign that spans over eons. Ethereum’s underlying technology has yet to be matched as the leading smart contract platform reinforces its adoption status. Over 3,000 dApps are currently running on Ethereum, highlighting its unparalleled usability. The blockchain’s fundamentals are becoming more and more celebrated as Ethereum generates uplifts in both usability and price action. To date, 23% of all ETH in circulation is currently locked in Smart Contracts.

The Blockchain Unicorn of 2015

Ethereum pushed the boundaries of blockchain by developing a new financial substrate powered by smart contracts. Since 2015, smart contracts have facilitated more convenient ways of using cryptocurrencies, storming the free digital exchange market, which was controlled by nobody.

In its current state, Ethereum has displayed its adaptability, being at the forefront of both the 2017 crowdfunding rally and 2020’s DeFi mania. Anthony Sassano, ETHHub creator and cryptocurrency analyst, drew attention to the amount of locked ETH, which constitutes 23% of the total circulating supply. More surprisingly, it matches the amount that was locked in 2016 during the DAO event.

Considering its price at the time of writing, this means that $63 billion worth of ETH is effectively locked; a huge contrast to the $260 million worth of ETH which was locked in 2016, when the price of one ETH token was hovering around the $13 mark. Anthony Sassano emphasized that the number of locked tokens encompasses all Ethereum byproducts, including DeFi, staking, multi-sig wallets, and “escrowed ETH/ETH.”

Lewis Harland, a Decentraland Park Capital researcher, remarked in response that $67 billion worth of ETH is now being productive and used within Ethereum’s blockchain. What’s more, more than 1 million ETH is locked in the BSC bridge. There have also been suggestions that even more ETH might be locked.

On the Flipside

  • Bitcoin’s depreciation may have a significant impact on the price of Ethereum, making it a less appealing investment opportunity.
  • The environmental narrative is an additional incentive for Ethereum to quicken its pace to PoS migration. 
  • CoinShares reported that Ethereum had its”largest outflows on record [since 2015] in the last week, totaling $12.7 million.

Ethereum 2.0 Couldn’t Come Any Sooner

Moving to a PoS consensus is, according to Vitalik, an urgent matter to continue to hold its high economic position in the cryptocurrency market. Analysts emphasize that DeFi is a “winner takes all” and there can only be a single dominant platform that accommodates the needs of all decentralized transactions.

The market capitalization of Ethereum puts the platform at an advantage, however, sidechain solutions, such as Polygon, perform faster and have less costly transactions, aiming to chip away at Ethereum’s market share. Polygon themselves, for instance, have surpassed over 7 million transactions. Ethereum price transactions stand at a six-month low, with transactions costing roughly $4, while in May, a single transaction could end up at around $70.

Out of the quarter of Ethereum that is locked in Smart Contracts, the Beacon Chain currently holds 5.42 million ETH, which amounts to $13.5 billion, according to the ETH 2.0 launchpad. Trustnode argues that despite 9 million ETH being locked in DeFi apps, the pressure of scaling ETH is mounting even further.

The price of Ethereum has grown in anticipation of ETH 2.0, which, according to Vitalik, is bound to be delayed. Sidechains remain a viable alternative for users who are looking to test different networks. The quest to attain market leadership in DeFi is still on as more players have entered the game, and more investors, such as Mark Cuban, are betting on alternative coins to come out on top.

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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Vlad Hatze

Social media fanatic and cryptocurrency enthusiast with a 10x mindset. working with ICO’s and upcoming blockchain project. Worked with ICO’s before the first cryptocurrency boom in 2017 and still HODL-ing. Creative content writer with a passion for electronic music, Instagram and cryptocurrencies