Ethereum DApp Trading Volumes Grew 36% in a Week – Will ETH Price Follow?

Ether (ETH) has gained 7.5% since its August 27 low of $2,396, but its 22% drop over the past 30 days shows that investors are still nervous about their positions. Despite increased network activity on Ethereum, the price of ETH has yet to reclaim the $3,800 levels seen in early June.

Weak spot Ether ETF demand partially explains ETH weakness.

This situation is even more concerning given that Ether has underperformed other coins, with altcoin market cap down 13% over the past 30 days. This move may be partly due to hype surrounding the upcoming US spot exchange-traded fund (ETF) launch on July 24. However, Ether was trading at $3,200 as of April 24.

Ethereum bulls are banking on the recent drop in average transaction fees on Ethereum to below $1 for the first time in four years. Combined with the successful reliance on Layer 2 solutions for projects that require higher throughput, Ethereum’s dominance in decentralized applications (DApps) remains unchallenged.

Etherbear argues that competing chains that offer lower fees on the base layer offer a simpler user experience for new users. In fact, most users are not concerned about the higher centralization of Tron (TRX) or BNB Chain (BNB) or the excessive costs of running a Solana (SOL) validator. The success of Base, Ethereum’s own Layer 2 solution, shows that users value direct access to Coinbase more than their own sovereignty.

Ethereum Network TVL and Transaction Volume Increase

Regardless of whether the price of ETH benefits from the Layer 2 ecosystem, the total value locked (TVL) on the Ethereum network is rising. According to DefiLlama, the total amount deposited into Ethereum DApps has increased to 18.9 million ETH, up 4% from two weeks ago. In contrast, Tron’s TVL has decreased by 10% in TRX terms over the same period, while Avalanche’s deposits have decreased by 4%.

Symbiotics, a recently launched staking project on the Ethereum network, has seen the largest TVL growth in the past two weeks, increasing by 83% to reach 640,310 ETH. Similarly, total deposits to Ether.fi’s liquid staking protocol have increased by 15%. However, most DApps do not require a large deposit base, so it would be misleading to claim that Ethereum’s network activity has increased solely by analyzing TVL.

According to DappRadar, in terms of network activity, Ethereum’s DApp volume grew 36% between July 22 and July 29, primarily driven by decentralized exchange Uniswap, which grew 35% to $30.8 billion, and automated market maker Balancer, which grew 46% to $18.1 billion. In comparison, the Solana network’s DApp volume remained stagnant at around $6.3 billion per week.

Reduced number of active addresses and transactions

However, not all aspects of Ethereum network activity have been positive since August 22. For example, the number of active addresses interacting with DApps has remained the same, but the total number of transactions has decreased by 8%. In contrast, the BNB chain has seen a 7% increase in active addresses, while Solana has gained 10% more users over the same period.

Ether’s performance is also being hampered by weak inflows into spot ETH ETF funds, which have seen net outflows of $107 million over the past two weeks, according to data from Farside Investors. The data shows a lack of interest from institutional investors, despite bullish momentum in similar Bitcoin (BTC) spot ETF products, which have seen net inflows of $523 million over the same period.

Ultimately, there is no clear sign of excitement within the Ethereum network that would lead to a significant increase in the price of ETH. Critics might argue that Ethereum’s average transaction fee falling below $1 is still not enough, especially considering that competitors like the BNB chain and Solana offer significantly lower fees. Ultimately, the data suggests that ETH’s price is not directly correlated to on-chain activity.