Author: Marcel Pechman, CoinTelegraph; Translated by: Deng Tong, Golden Finance
The Ethereum network continues to lead decentralized application (DApp) adoption in terms of transaction volume and deposits. While competitors like Solana and BNB Chain benefit from lower transaction fees, thereby boosting metrics like unique active addresses, there is nothing stopping well-funded entities from inflating Ethereum’s DApp numbers.
Indeed, the recent surge in activity on the Ethereum network diverges from broader cryptocurrency market trends and even contradicts other usage indicators. While it is impossible to prove any manipulation, people should be aware that even with transaction fees as high as $2.4, the numbers could be distorted, especially in decentralized finance (DeFi) applications where deposits can exceed $1 billion.
Top blockchains by 7-day DApp transaction volume (USD). Source: DappRadar
Notably, Ethereum was the only network in the top 20 to report an increase in transaction volume, up an impressive 83% from the previous week. Similar protocols such as BNB Chain, Polygon, Solana, and TON saw average transaction volumes drop by over 30%. Additionally, Ethereum’s 475,980 addresses pale in comparison to BNB Chain’s 1.18 million and Solana’s 1.62 million.
It is worth noting that the surge in Ethereum transaction volume has not been matched by an increase in the number of users. Using unique active addresses interacting with DApps as a metric, Ethereum's number of users decreased by 8% from the previous week, which is better than its competitors but contradictory given its large increase in transaction volume.
One could argue that despite having fewer users due to relatively high fees, the growth in Ethereum deposits could have offset the drop in activity.
Top blockchains by total value locked in DeFi (USD). Source: DappRadar
Data shows that the total value locked in Ethereum DeFi applications fell 17.5% in 7 days, while competitors such as Solana and Avalanche successfully attracted deposits. During this period, the number of DApp transactions on the Ethereum network did not increase, indicating that more thorough analysis is needed to understand the anomaly.
Top Ethereum DApps by 7-day transaction volume (USD). Source: DappRadar
Ethereum transaction volume growth was primarily driven by Balancer’s 422% growth in seven days, totaling $40.6 billion. For example, this is 13 times the total activity on the BNB chain during the same period. However, Balancer’s significant increase in transaction volume did not coincide with improvements in other metrics; the DApp saw a 5% decrease in unique addresses and a 14% decrease in transaction volume during the same week.
Excluding Balancer’s contribution, Ethereum’s seven-day volume growth is actually down 5%, as this single DApp accounts for 59.5% of the entire network’s volume. While it’s not uncommon for a single DApp to dominate a blockchain’s volume — the BNB chain is primarily driven by PancakeSwap, while Uniswap has nearly 50% share on the Polygon network — Ethereum’s reported growth in activity should be viewed with caution, as a single DApp is skewing the data.
Determining the true demand behind the surge in Balancer trading volume is challenging. Even if some transactions within the DApp are marginally profitable, this does not conclusively determine user intent. For example, Binance exchange announced on July 1 that the Balancer (BAL) token was on a watch list for potential delisting, which may be related to the DApp’s unusual activity, although establishing a direct link between the two events is complicated.
