In recent months we have witnessed a real boom in the use of Ethereum. Essentially due to the influence of the Decentralized Finance Rush (DeFi) on the ETH Blockchain. However, as the DeFi fever begins to subside, we begin to see the use of Ethereum sinking, gradually returning to its normal standards. This despite the increase in its price in recent weeks.
The influence of DeFi on ETH
Without a doubt, decentralized finance has been the great event of the crypto market during this year 2020. And, in just a few months, the DeFi managed to increase its value exponentially. Attracting thousands of investors from around the world, and diverting the attention of everyone in the crypto world to this sector of the market.
This boom in the DeFi sector had a tremendous impact on the Ethereum Blockchain as well. And, most of the decentralized finance protocols that exist today are located in this blockchain. Therefore, as users’ interest in DeFi increased, so did the use of the Ethereum Blockchain for transactions related to this sector.
Thus there were two simultaneous events. The first was a significant increase in the price of Ethereum, since it was necessary to pay a commission in ETH to use its blockchain. The increase in DeFi transactions in it led to an increase in the demand for the cryptocurrency to pay commissions, boosting its price.
The second effect of the DeFi boom on Ethereum was a major increase in the use of its network. What generated its congestion and the exaggerated increase in the cost of mining commissions. Allowing Ethereum miners to generate 450,000 ETH or 169 million dollars during the month of September alone.
Ethereum usage sinks
However, the effects of the DeFi boom on Ethereum usage could not be permanent. Therefore, now that we are seeing the end of the decentralized finance fever, with the fall in the price of most DeFi tokens. We have also witnessed the plunge in the use of Ethereum.
Thus, despite the fact that its price has managed to increase in recent days, going from $ 336 at which it was on October 8 to $ 373 at the time of writing this article. Figures compiled by crypto market analytics firm Santiment would demonstrate a slow but steady decline in cryptocurrency use since September 17.
This drop in Ethereum usage, however, is not necessarily bad news for the cryptocurrency. Well, it would give the Ethereum Foundation team more time to fully implement the new version of the virtual currency, ETH 2.0. With which it is expected to solve the problem of scalability of the currency, and avoid that before a new peak in its use in the future, there is another exaggerated increase in commissions and mining times.