The daily amount of ETH destroyed hits a new low this year
Since the London upgrade in August 2021, the Ethereum blockchain has enabled an ETH burning mechanism with the aim of optimizing transaction fees. EIP-1559 divides the original gas fee that needs to be paid to miners on Ethereum into two parts: the base fee and the miner tip. The basic fee is a fee that users must pay, and it will be destroyed rather than owned by the miners; while the miner tip is a dynamic fee that is used to incentivize miners to prioritize packaging of users transactions when transactions are congested.
According to statistics from The Block, the daily amount of ETH destroyed was 946.63 ETH on August 18, 2023, setting a new low since this year and a relative low two years after the implementation of EIP-1559.
Because when a transaction occurs on the ETH main network, the destruction of ETH will be triggered, and the recent decline in the amount of ETH destruction indicates the weakening of Ethereum L1 activity. This is because market participants have shifted their attention to the more scalable L2. Base’s on-chain activities and the diversion of L2 such as Optimism are important reasons for the recent decrease in the number of ETH destroyed. In addition, projects such as zkSync and StarkNet that are in the development stage have also indirectly caused the reduction in the amount of ETH destroyed.
Recently, Coinbase’s launch of Base L2 has been welcomed by the crypto community. Since launch, $236 million worth of crypto assets have crossed onto Base, including $144 million worth of ETH.
Base launched more than 100 Dapps on August 9, and the data reached a level comparable to other mainstream Ethereum L2 networks. According to statistics from Dune Analytics, the number of daily active users of Base once exceeded 136,000 on August 10, which is higher than Optimisms 114,700 in the same period.
According to data from L2 Beat, Base currently processes an average of 5 transactions per second, which is not congested and is far from reaching its peak. This data is comparable to Optimism and second only to Zksync ERA and Arbitrum One in L2.
Two other recent L2 forks from the Ethereum mainnet include zkSync and StarkNet, which are currently in development. zkSync uses zero-knowledge technology to make transactions on Ethereum faster and cheaper, while StarkNet is a permissionless decentralized zero-knowledge rollup designed to scale decentralized applications on the Ethereum blockchain. According to reports, the two projects, which are still in the development stage, are gaining attention because of the possibility of airdrops to incentivize their early users when they are officially launched. Therefore, Zksync and Starknets respective testnets have a large influx of active users.
The rise of L2 may reduce the amount of ETH destroyed in the short term, but in the medium and long term, the expansion and ecological support of ETH are particularly important, especially after the implementation of EIP-4844, the cost of L2 will be significantly reduced, thus making Ethereum The Internet is used on a larger scale.
Changes in ETH pledge data
Judging from the current pledge data, the Shanghai upgrade has had a profound impact on the ETH pledge field, and one of the most notable indicators is the substantial increase in the number of ETH pledges. According to statistics from Token Terminal, as of August 20, the number of ETH pledges reached 23.72 million, equivalent to approximately 19.44% of the total circulation.
Since the Shanghai upgrade (opening up pledge withdrawals), the number of ETH pledged has increased netly to 6.28 million pieces, which shows that the Shanghai upgrade has cleared away doubts for investors about staking ETH.
From the data provided by Token Unlocks, it can be seen that the number of ETH validators has been rising steadily, reaching 740,000 at present, and the annual rate of return on pledge remains at 4.97%. It is worth noting that the number of ETH daily withdrawals continues to decrease following the recent crypto market drop.
Ethereum development progress
On August 17, ethereum developers held a meeting on the topic and announced that a new testnet, Holesky, would go live next month. Holesky may provide more than 1 billion testnet ETH, making it easier for developers to access the testnet and operate according to testing goals.
Testnets are in turn defined as cloned blockchains where developers can test applications and smart contracts before deploying them to the mainnet. Ethereum currently has two main testnets: Goerli and Sepolia. However, Goerli is expected to be replaced by the Holesky testnet soon, according to details determined at the ethereum developer meeting. That said, Holesky will be a testnet developed for Ethereum staking, infrastructure, and protocols. And Sepolia will continue to serve as a network for testing Dapps, smart contracts, and other EVM functionality.
Ethereum Futures ETF Expectations
On August 18, according to Bloomberg, the U.S. Securities and Exchange Commission (SEC) plans to approve the listing of the first Ethereum futures ETF. It was not immediately clear which funds would be approved. Several ETFs may be available before October, according to people familiar with the matter. Previously, nearly a dozen companies, including Volatility Shares, Bitwise, Roundhill and ProShares, have applied to launch Ethereum futures ETFs.
In addition, according to the Wall Street Journal, the SEC may allow multiple Ethereum futures ETFs to be listed at the same time. Asset management firm Volatility Shares plans to launch an ethereum futures ETF on Oct. 12, which will be the first of its kind in the United States. Since the July filing, the SEC has not asked asset managers to withdraw their applications, suggesting a fall launch of such funds is a possibility.
ETH whales reduce their holdings
As shown in the chart above, Ethereum whales holding 10,000-100,000 ETH have seen significant selling since mid-July. Between July 14 and August 18, whale addresses reduced their ETH holdings by 1.12 million. At present, data on the chain shows that the Ethereum whales have not made any buying actions in anticipation of the Ethereum futures ETF. Despite some price rebounds in ETH following the strong sell-off on August 18, whales overall continue to reduce their holdings. The whale’s ETH holdings fell by 4% from July 14 to August 18, while the price of ETH also fell by 18%.
At present, the RSI indicator of ETH has dropped below 30, which means that it has entered the technical oversold stage, and strategic investors may use it as a reference indicator to start buying.
For example, after the market fell, 3 addresses marked as smart whales (all with a history of buying low and selling high in previous ETH trading cycles) made buys. One of the addresses woke up after 5 months of dormancy and bought 907.4 ETH for $1,680 for $1.52 million.
Another address beginning with 0x ee 2 spent $11.15 million, buying 5,120 WETH and 1,506 ETH for $1,683. Prior to this purchase, the address had invested 6,676 ETH and 2,747 Steth, and lent $8 million from decentralized lending platform AAVE.
The third label whose address starts with 0x 828 bought 2,600 ETH at an average price of $1,682, for a total of $4.38 million. The address made $14.17 million in profits over the last two ETH trading cycles. Currently, the address holds a total of 22,601 ETH, worth $37.8 million.
There are comments that these giant whales may be waiting for the SEC to formally confirm and approve the Ethereum futures ETF.
On the whole, the approach of the Cancun upgrade and the Ethereum futures ETF make the current trend of Ethereum slightly better than that of Bitcoin, which may become an important support for the trend of Ethereum.
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