Ethereum adoption is supported by these 2 pillars, but future growth is still uncertain – report

A report from Coinshares has revealed that Ethereum’s (ETH) role in crypto is being shaped by two main pillars: markets and stablecoins.

However, while the web is making waves in these areas, the path forward for new applications remains unclear.

Decentralized exchanges dominate

The report, published on September 24, indicated that the marketplace and stablecoins accounted for slightly more than half of Ethereum’s current use cases. Decentralized finance (DeFi) protocols and the booming stablecoin market are key drivers of the trend, highlighting Ethereum’s role as the backbone infrastructure for so many crypto projects.

Markets such as decentralized exchanges (DEX) and non-fungible token (NFT) platforms have solidified the network’s position as the go-to blockchain for tokenized assets, according to the study.

Uniswap alone accounted for at least 15% of transaction fees generated on Ethereum in the first half of 2024. The OpenSea NFT market was also identified as a key contributor to blockchain fees, although its importance has narrowed significantly after peaking at $572 million in the first half of 2022.

Additionally, the survey noted that more than $135 billion in stablecoins are currently circulating on Ethereum, including the two largest by market capitalization, Tether (USDT) and USD Coin (USDC).

These digital assets rely on the blockchain framework to maintain their peg to fiat currencies while adding liquidity to DeFi platforms and making cross-border payments seamless.

Ethereum challenge to find sustainable use cases

Despite these positives, the Coinshares report raised an important question: What comes next?

Analysts believe that the network’s recent upgrades, including its transition to Proof-of-Stake (PoS) and the continued development of Layer 2 (L2) scaling solutions, have put it in a good position for the future growth. However, future innovations remain speculative and the demand for new decentralized applications (dApps) is uncertain.

CoinShares suggests that Ethereum’s future success could depend on its ability to overcome its current use cases. The network’s potential for business adoption, gaming and innovations related to the metaverse exists, but real-world demand and implementation are key. Ethereum will need to attract developers to push the limits of what blockchain technology can offer in everyday life.

In a summary of the findings published on X, James Butterfill, head of research at the crypto asset manager, stated that ETH’s value is driven primarily by the “demand for Ethereum transactions,” or the amount that users are willing to buy services on the network. network, rather than factors such as bet performance.

The report adds that the majority of transaction fees on the network are generated through a “very small set of services,” which largely consist of speculation or simple transfers of value. As such, Butterfill stated that the network must focus on creating “sustainable utility on the chain” to secure its long-term value.

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