Ethereum’s Transaction Volume Hits a 5-Month High

Despite Ethereum (ETH) correcting from the historic high of $4,860 attained recently, the second-largest cryptocurrency is still experiencing high transaction volume on its network, as disclosed by Glassnode.

The crypto analytic firm stated:

“Ethereum’s transaction volume (7d MA) just reached a 5-month high of $391,959,437.60.”

High transaction volume on the ETH network is a reflection of increased use cases. For instance, the decentralized finance (DeFi) and non-fungible token (NFT) industries heavily rely on the Ethereum blockchain. 

Furthermore, the demand for ETH has risen to the extent that dormant coins are also on the move. For example, 1.82 million dormant ETH recently moved for the first time in 5 years. 

Ethereum layer 2 continues to receive more investments

Ethereum layer 2 (L2) is gaining steam based on the investments being channelled. For instance, StarkWare, a blockchain startup specializing in ETH layer 2 development, recently raised funds worth $50 million, bringing its value to $2 billion. 

In August, Offchain Labs was able to get $120 million in Series B funding meant for the Ethereum layer 2 ecosystem. 

Layer 2 is a distinct network running on top of Ethereum Mainnet (layer 1) but takes advantage of the robust decentralized model offered by layer 1. It takes the form of smart contracts to boost Ethereum’s scalability as transactions continue to grow.

Scalability is a challenge to typical blockchain designs because every node in the network has to process each transaction. This limits the transaction processing capacity of the entire system.

Ethereum layer 2 allows transactions to go through without every node processing the whole transaction. 

Meanwhile, 3 million ETH has left crypto exchanges, according to Glassnode. 

This correlates with Santiment’s research that Ethereum has been shifting to cold wallets for holding and DeFi-related activities, which is an encouraging sign for long-term price prospects.