There has been a notable spike in network activity in the broader Ethereum ecosystem. according to Dune analysesExcluding Ordinals-related addresses, there are more than 10 million wallets actively transacting with the Ethereum mainnet and Layer 2 solutions such as Base, Optimism, and Arbitrum.
The Ethereum ecosystem is vibrant: record 10 million active wallets
This achievement is a direct result of the successful implementation of the Dencun upgrade in mid-March 2024. The update, one of several other upgrades set for Ethereum, effectively addressed pressing challenges, particularly those related to scalability and gas fees.
With the significant increase in active wallets connecting to different protocols deployed on the mainnet, sidechain or off-chain, one analyst on X is optimistic, Forecasting The number will expand from 10 million to 100 million in the next bull cycle. This rise will be accelerated in part by improvements made by Dencun, which has made Layer 2 transactions using pooling operations cheaper.
To do this, Dencun uses “blobs,” a new transaction type, to store data that has not been processed by the Ethereum Virtual Machine (EVM). Blobs can be thought of as new channels for storing data within a block that help simplify the block verification process. Notably, it does so without compromising data availability, representing a huge boost for Ethereum Layer 2 solutions that integrate Dencun.
TVL across Layer 2 and DeFi protocols is rising rapidly
With lower gas fees and more efficient layer 2 platforms, Dencun has helped attract new users, revitalizing the broader Ethereum ecosystem. The incremental total value locked (TVL) across Layer 2 gateways and the mainnet reflects this.
according to L2BeatOn average, leading tier 2 platforms such as Arbitrum and Optimism saw double-digit increases in the past week. To date, all Layer 2 platforms manage over $39 billion in assets. Collimated Data From DefiLlama also confirms this growth. Over the past six months, the total value of leading decentralized finance (DeFi) protocols has increased from approximately $20 billion to more than $54 billion at press time.
Despite these developments, challenges remain. Ethereum is fragile and cannot scale efficiently when usage is high. Therefore, it is very likely that gas fees will rise in the next uptrend, especially if ETH prices rise, crossing $4,000 which is an all-time high.
In addition, users – mainly meme publishers – may prefer to use alternatives such as Solana or Avalanche, which mitigate the activity.
However, Ethereum supporters remain positive. As cryptocurrency prices stabilize and are likely to keep pace with Q1 2024 gains, more users will be keen to explore some of the best protocols launched on the mainnet or across layer 2 platforms.
Featured image from Canva, chart from TradingView