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- Galaxy Research notes that since Dencun, transactions on Ethereum Layer 2 have more than doubled, likely due to bots.
- The Ethereum mainnet also saw a significant drop in total revenue and Ethereum burn.
the Ethereum [ETH] The Dencun upgrade was released in March of this year. While it achieved the desired effect of making Layer 2 scalable and cost-effective, it also had an unintended drawback.
According to an in-depth analysis by Galaxy, the EIP-4844 upgrade has significantly reduced the costs of Ethereum pools, leading to increased usage. It has also shifted revenue away from the Ethereum mainnet.
Galaxy researcher Christine Kim points out that since this upgrade, the Ethereum network has seen a decline in revenue and burn rate.
Source:X
Data from Ultrasound Money A recent study showed that since March 13, when the Dencun upgrade was launched, the ETH burn rate has decreased by about 0.18%.
Are robots driving the increase in transactions?
The total value locked (TVL) of Ethereum staking operations is $33 billion per operation. For 2 houses This total sales value has increased by more than 200% in the past year.
In addition to the TVL increase, Galaxy noted that layer 2 transactions have doubled to over 6.6 million since Dencun. This increase comes as transaction costs have also dropped significantly.
However, the increase in transaction volumes was accompanied by an increase in failure rates. Base recorded the highest transaction failure rate at 21%, followed by Arbitrum at 15.4% and Optimism at 10.4%.
The research attributed this failure rate to bot activity. Due to the low transaction costs, there has been an increase in addresses that make more than 100 transactions per day, which are likely to be bots.
Impact on ETH
Declining revenue and slower burn rate on Ethereum have curbed ETH price growth. Ether has fallen 22% in the last 30 days, a significant gap from Bitcoin’s 7.5% decline.
ETH was trading at $2,668 at the time of writing after gaining 1.3% in 24 hours. A look at Chaikin Money Flow shows buying pressure, but the trend is weakening.
While the indicator was positive, the CMF line was heading south at the time of writing, indicating that sellers may enter the market.
Source: TradingView
Traders should keep an eye on the key support level at $2,572. If ETH fails to hold this support, liquidity is likely to drop below $2,200.
Ether’s bullish trend is also facing a major barrier at $2,689. The price has failed to break this level since August 19.
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While the effects of rising supply may hamper ETH price action, the annual inflation rate, which is near monthly lows, points to a positive picture.
A decrease in this measure tends to increase investor confidence, and therefore the price.
Source: Santiment
