Investigating market trends and dapp usage
NFT marketplace OpenSea, web3 wallet service MetaMask and the decentralized exchange Uniswap are the biggest gas guzzlers on the Ethereum blockchain. Crypto and blockchain enthusiasts are more active as we leap into 2022 amidst uncertain regulatory and macroeconomic factors. Vitally, using the ETH burn board provided by Ultrasound Money, we can investigate what these investors are doing.
Every time an action takes place through a dapp on Ethereum, the user pays a gas fee. Notably, a fee burn started on August 5, 2021, with the activation of EIP-1559. Fee burn is a mechanism that destroys ETH base fees paid for transaction inclusion on Ethereum. Base fees are minimum fees for transaction inclusion in an Ethereum block. As a result, ETH supply decreases whenever ETH burns via fee burn. Less ETH means more scarcity, which will potentially equal a higher ETH price in the future.
Tracking the top ETH gas burners can reveal which protocol or dapp is completing the most transactions and chomping the most gas. By looking at this information, we can ascertain which dapp category is peaking as we enter 2022. If Uniswap is eating the most gas, many users are making trades. If OpenSea is guzzling gas, then investors are buying NFTs. Using a seven-day ETH burn lens, we can start to understand the prevailing trends of Q1 2022.
No NFT Collections
The first thing noticed is that there are no individual NFT collections in the top 10. It is important because it costs the buyer gas when minting an NFT. Not seeing any single NFT collection in the top ten represents a significant change from observations made at the back end of 2021.
However, this doesn’t mean NFT trading isn’t happening, just that investors buy on secondary markets. OpenSea is the world’s leading NFT marketplace and sits proudly atop the pile of ETH gas guzzlers, having crunched through over $35.6 million worth of gas in the last seven days. Telling us that the NFT markets are buoyant right now can also signal a mass sell-off as buyers try and recoup their investments, perhaps made at the peak of NFT hysteria. However, buyers are showing that demand for NFTs is still high.
Stability is key
Two stablecoins appear in the top ten – USDC and USDT. Traders often use stablecoins to move in and out of investment positions. For example, suppose the price of ETH starts to fall dramatically. In that case, investors can swap out to a stable coin in a bid to retain as much value as possible until the markets show signs of positivity. Notably, trading bots can execute such trades many times a day and are not always manual. This activity would appear to fit perfectly with the current market trends of falling prices for many leading cryptocurrencies. The two stablecoins represent over $14 million of burned ETH in the last seven days.
Stablecoins also represent excellent passive income generators with leading centralized exchanges offering upto 10% on holdings. Many people have awoken to the notion that savings can be converted over into crypto to gain significantly higher interest than would be available in a bank.
Two key dapps supporting token trading also feature high on the list, namely Uniswap, and MetaMask Swap. This further confirms the stable coin theory outlined above and the general token trading trend that people move in and out of stablecoins.
Uniswap is responsible for burning over $26 million worth of ETH in the last seven days, while MetaMask is responsible for a little over $6 million. As the leading Ethereum token swap platform, we expect Uniswap to be high on the list. Arguably, rumors of a MetaMask token and airdrop have stimulated many to complete swaps using the built-in feature of the popular blockchain wallet, despite fees on Metamask being higher than Uniswap. Digging into the block explorer reveals many low-cost transactions which would seem to support the theory that people are making swaps simply to notch up activity and be eligible for an, as yet, completely unconfirmed airdrop.
Activity on both platforms could also be accounted for by more traders coming to the table amidst price slumps and favorable buying opportunities.
GAS is the governance token for the GAS DAO. A super-DAO formed with the vision of being the heartbeat and voice of the largest community of Web3 native users on the Ethereum Network. Launched as a decentralized autonomous organization with a free and fair initial distribution 100x bigger than the original DAO.
The GAS token airdrop is happening now until May 1, 2022, with 55% of the tokens allotted to the airdrop. Hence the position on the leaderboard as each successful claimant pays a gas fee to release their GAS tokens. The criteria are pretty simple, and you can check your eligibility here.
Strong Block provides Ethereum and Polygon ‘Nodes-as-a-Service’ to its customers. Simply put, nodes are responsible for keeping a full, up-to-date copy of all blockchain transactions and providing access points where blockchain applications can quickly access that full copy. Previous to Strong Block’s Nodes-as-a-Service, running a node required knowledge of blockchain coding and having a server able to run the node reliably throughout the day.
By automating all of these processes, Strong Block makes it possible for anyone to participate. Further incentivization includes entry to an NFT prize draw for every customer running a node plus four staking pools offering between 20% and 75%. You can learn more about Strong Block and creating a node here.
Looking at the activity through this Ethereum activity lens has highlighted one airdrop opportunity that may have previously gone unseen with GAS DAO. Plus, it uncovered Strong Block, which appears to be gaining significant traction as more people look to get involved with the blockchain and crypto industry at a grassroots level.
Trends observed on secondary NFT trading platform OpenSea confirm that NFT trading is still buoyant. By digging deeper into the individual sales on the platform, one could ascertain the nature of the sales. I.e., Avatars, in-game items, lands, etc., revealing further NFT buyer trends as we enter 2022.
DeFi and token swapping activity is expected, but the emergence of two stablecoins within the top ten points toward investors walking on the side of caution as we enter 2022.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds ETH, BTC, AGIX, HEX, LINK, GRT, CRO, OMI, IMMUTABLE X, ENS, GALA, AVASTR, GMEE, CUBE, RADAR, FLOW, FTM, BNB, SPS, WRLD, and ADA.