Ethereum is on its way to become one of the most versatile assets in the world
In an analysis thread on Twitter, @CroissantETH began by explaining how the Ethereum project started.
Ethereum started in 2015 when it offered 72 million ETH to over 10,000 Bitcoin addresses that took part in its initial coin offering.
Presently, only a few of these addresses hold a sizeable amount of the coins offered in 2015.
Of the 10,000+ wallets;
81% have 1% of their initial balance or less
9.5% have the same initial balance (presumably lost)
Only 64 wallets have grown their balance.
Where are the tokens?
So far, there is now a total of 118 million ETH in circulation, which is distributed across more than 135 million unique addresses.
According to Croissant, most of the world’s supply of ETH - 26.86% to be exact - is in smart contracts.
A smart contract is a blockchain program that digitally facilitates, verifies, or enforces the negotiation or performance of a contract. Smart contracts allow the execution of credible transactions without third parties. (blockgeeks.com)
That sums up to around 31,825,848 ETH, or US$143 billion.
Most of the smart contract Ethereum is used to support decentralised finance services (DeFi), stablecoins, and a host of other things on the Ethereum ecosystem.
Still from the thread; “…Of that 26.86% in smart contracts, 77% is locked in DeFi. That’s an astounding 24.5M ETH, representing 20.67% of the total supply.”
Ethereum Exchange Reserves Plummets to New Lows
Croissant’s thread moved on to talk about how since late 2020, the supply of ETH on exchanges has continued to decline. According to Glassnode, exchange balances for ETH have recently hit as low as 14,246,767 ETH – a mere 12% of the total supply of ETH.
Additionally, an estimated 50% of the total ETH supply has not changed ownership in more than a year.
These imply that Ethereum investors are choosing to hold their assets, causing illiquidity and volatility in the market.
Staking also plays a role in the declining circulation of Ethereum. With over 8,394,818 ETH staked on the network, this amounts to 7.08% of the ETH supply sitting dormant in deposit contracts. This figure is projected to grow still.
The thread also cites instances of EIP-1559 burning almost 1% of the total ETH supply and how another 4.9% is on the Ethereum layer two network.
As to how Ethereum is a productive asset, he gave examples of how 13,636 dApps and more than 300,000 ERC20’s are dependent on the network. Croissant also cited NFTs as another application and mentioned how people use their Bitcoins on Ethereum.
Croissant concluded the thread by saying, “We are very quickly moving from the mindset of ‘I buy ETH because it appreciates,’ to the mindset of ‘I buy ETH to do things."
Photo: Twitter @CroissantETH