There are now more addresses than ever holding some amount of Ethereum, highlighting the increasing adoption of the second-ranked cryptocurrency.
This is after the number of Ethereum addresses with a non-zero attained an all-time high of 71,364,788, as of December 29, 2021, on-chain data by Glassnode indicates.
Why Ethereum active addresses are on the rise
Although Ethereum tremendous price movement can be attributed to the growth in addresses with some balance, the spike can also be linked to the platform’s utilization in other booming sectors like decentralized finance (DeFi) and non-fungible tokens (NFTs).
Ethereum’s dominance in the DeFi sector is evident because the network now accounts for over 62% or $154.83 billion of the total DeFi total value locked. As reported earlier by Finbold, the total value locked in the DeFi space was $247.48 billion on December 29, growing by 1,222% from the January 1 figure of $18.71 billion.
DeFi refers to a blockchain-based form of finance that does depend on central financial intermediaries like brokerages, exchanges, or banks to offer traditional financial products and instead leverages smart contracts on blockchains.
In 2021, Ethereum’s price spiked over 400% at some point, attaining an all-time high price of above $4,880. The price movement potentially contributed to interest from short-term traders who did want to miss out.
The rising active Ethereum addresses might also point to more investors accumulating the asset in anticipation of a bull rally. This argument is partly backed by our previous report that shows that more Ethereum is now likely being held away from exchange wallets.
Notably, the Ethereum balance held on central exchanges hit a record three-year low of 14,042,589.854 ETH as of December 5 2021.
Furthermore, Ethereum has been attractive to investors, with the network hitting several milestones in 2021. For instance, in October 2021, Ethereum launched the Altair upgrade on the PoS Beacon Chain, bringing closer the ETH 2.0 migration that comes with staking capabilities.
As reported by Finbold, the ETH 2.0 upgrade is already witnessing some activity, with deposit contracts attaining a new all-time high of 8,662,786 ETH as of December 15, 2021.
Additionally, the addresses with some balance also point to the mainstream adoption of cryptocurrencies. As more investors get involved in digital assets, Ethereum’s status as the second-ranked cryptocurrency is bound to benefit.
Worth noting is that despite the progress made on the Ethereum network, aspects such as high gas fees remain a significant challenge harbouring the increased asset adoption. In this line, the Ethereum community notified Finbold that the holders might also be stuck with Ethereum in their addresses because they cant afford the high exchange fees.
However, the challenge is expected to be fully solved by shifting to the proof-of-stake (POS) consensus mechanism from the current proof-of-work (POW) framework.