Ethereum is in the midst of an interesting period as its transaction volume continues rising during the price advance toward $5,000 Ethereum. The growth of active Ethereum addresses has been flat lining between 400,000 and 600,000 since 2018. This comes at a time that layer-2 networks are doing the heavy lifting of offloading more than 12 million daily transactions.
Layer-2 solutions, like Arbitrum and Base, offer users cheaper fees and quicker transaction speeds. Enterprise-grade, high-throughput layer-1 competitors such as Aptos are lapping up user traffic in waves. Ethereum’s market share and protocol revenue is tanking.
Ethereum’s daily transaction count continues to increase despite competition chipping away at revenue. The latter of Ethereum’s widely recognized user-centered metrics, active address count, sees brief peaks over 1 million. Now, layer-2 solutions like Arbitrum and Base have been the trending go-to spaces for users to mitigate transaction congestion at this grassroots level.
On one such Monday this October, Arbitrum processed more than 3.4 million transactions and Base saw 8.6 million transactions. Aptos set its own record at about 3.8 million transactions for the same day. These numbers are a testament to the huge amount of value being processed off of the main Ethereum chain.
The constantly evolving competitive environment highlights the importance for Ethereum to be agile with its paid scaling and execution strategy. The spike in transaction volume as ETH nears the $5,000 mark suggests that there is healthy interest in the crypto. The growing competition from layer-2 solutions and other layer-1 platforms continues to be a big challenge.
The emergence of layer-2 networks and alternative layer-1 blockchains is changing the landscape of the entire cryptocurrency space. As Ethereum attempts to defend its throne, continued evolution of its scaling solutions and ecosystem will be important.
