In recent months, there was a significant number of users interacting on the Ethereum network as a result of the yield farming craze in the decentralized finance (DeFI) market. This resulted in the surge of active Ethereum addresses, which painted a bullish picture for the second-largest cryptocurrency. On the other side, the massive interaction on the network led to a surge in the transaction fee.
This is evident as Ethereum transactions fee began to drop, following the decrease in the active addresses and overall usage of the network.
Drop in active Ethereum addresses
According to the data shared by Santiment, an on-chain analytics company, the number of unique addresses on the Ethereum network has been on the decline since September 17. This reportedly translates to a drop in the users’ interaction on the network, which was mostly driven by the activities in the decentralized finance industry. The record also comes as Ethereum is the major root network for DeFi protocols.
🤔 $ETH's daily active address metric is still revealing that there is still plenty to be desired since its peak in late July. There has been a decline in unique addresses interacting on the #Ethereum network, particularly since September 17th. https://t.co/MA6YkdGYlz pic.twitter.com/6FfOaVjMBY
— Santiment (@santimentfeed) October 11, 2020
Thus, during the yield farming craze, which attracted many cryptocurrency players into the DeFi market, the congestion on the network increased. This consequently led to the payment of high fees to complete a single transaction. Following the drop in active Ethereum addresses, there is now less congestion on the network and a less transaction fee.
Ethereum Gas Price Plummet
Due to the declining activities on the Ethereum network, the Ethereum gas prices have been dropping according to the information provided by bitinfocharts.com. The highest point of Ethereum Gas price was reportedly recorded on September 2 and was also traced to DeFi, particularly during the SushiSwap frenzy. At the time, the DEX, which forked from Uniswap, took in more than $1 billion in assets.
From this point, however, the Ethereum Gas people began dropping gradually, to the extent that about 91 percent of the Gas price has been shaded. Now, it is safe to note that the Ethereum network has become cheaper and faster to use, unlike the past months, where it was flooded by users looking to grab the highest yields in the DeFi market.
At the time of writing, the second-largest cryptocurrency is trading at the price of $374 on Coinmarketcap.