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Ethereum struggles as DApp volumes drop 19%

Ethereum struggles as DApp volumes drop 19%

GrafaGrafa2024/09/19 02:35
By:Mahathir Bayena

Ethereum’s Ether (CRYPTO:ETH) price has been under pressure, struggling to stay above $2,250 after a sharp 19% drop in decentralized application (DApp) volumes. 

Over the past two weeks, ETH has failed to break past the $2,450 resistance, raising concerns among traders about whether the current support level will hold. 

One key issue affecting Ethereum’s performance is rising transaction fees, which currently average $1.70. 

Although scalability solutions have eased some of these costs, they have added complexity for users and prompted questions about the network's long-term sustainability. 

Lower DApp volumes can reduce demand for ETH by cutting into transaction fees and signaling that users may be exploring alternative networks. 

Ethereum remains the dominant platform in terms of activity and development, but its high transaction costs and relatively low staking returns are hurting its competitiveness. 

Only 28.5% of ETH in circulation is staked, a much lower proportion than rival blockchains like Solana and Cardano

Additionally, Ethereum’s staking yield of 3.3% pales in comparison to the 4.6% return offered by a U.S. 6-month Treasury bill, which has made staking less attractive for investors. 

Despite these challenges, Ethereum still leads the market with a total value locked (TVL) of $44.15 billion, significantly higher than its competitors. 

However, the 19% weekly decline in DApp volumes has been worrying, particularly as other blockchains like Solana and BNB Chain saw their DApp volumes rise during the same period. 

Other key metrics, including Ethereum’s layer-2 transaction speeds and decentralized exchange (DEX) volumes, also show signs of slowing activity. 

Layer-2 solutions saw a drop in transactions per second from 119 to 94, and leading DEXs like Uniswap and 1inch posted volume declines of up to 29%. 

While Ethereum’s fundamentals remain strong, the rise in Ether deposits on exchanges could signal potential short-term selling pressure. 

Investors are closely monitoring these trends, but for now, the $2,250 support level remains a critical point for ETH’s price stability. 

At press time, the Ethereum (ETH) price was $2,391.16.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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