Ethereum processed three times as many transactions as Bitcoin in 2022

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(Kitco News) – Leading smart contract platform Ethereum (ETH) has seen a mix of developments over the past year as the network finally transitioned from proof-of-work (PoW) to proof-of-stake. (PoS) while seeing its price drop below the previous cycle high, which has never happened before.

Thanks in part to its transition to PoS, as well as the fact that it supports the most decentralized applications (dApps), the Ethereum network processed 338% more transactions than the Bitcoin (BTC) network. according to Nasdaq and Ycharts data shared on Reddit on January 2.

Data shows that during 2022, the average number of daily transactions on the Ethereum network was 1,119,292, compared to 255,086 for Bitcoin. Transactions on Ethereum also showed more volatility compared to Bitcoin, which showed a “clear periodic pattern”, according to Reddit user reddito321.

Ethereum versus Bitcoin transactions. Source: Reddit

In total, there were 408,541,610 transactions on the Ethereum network in 2022 while Bitcoin recorded a total of 93,106,378 BTC transactions. These results are not unexpected as the number of smart contracts and non-fungible token projects hosted on Ethereum gives it a greater number of use cases.

Ethereum staking and layer 2 promote usage

Ethereum’s popularity becomes even more apparent when Layer 2 (L2) transactions are added to the mix. Data from L2beat shows that the number of L2 transactions per second actually surpassed the number of Ethereum Layer 1 (L1) transactions in mid-October and has remained higher for the vast majority of the time since.

Transactions on the Ethereum mainnet versus L2 transactions. Source: L2beat

Another contributing factor to boost the usage of the top altcoin is its upcoming hard fork in Shanghai, which is expected to take place in March. Following this upgrade, Staked Ether (stETH) will be able to be removed from the Ethereum Beacon chain, which will help reduce the risk of staking.

In anticipation of this event, tokens from several platforms that facilitate Ether staking – including Lido DAO (LDO) and Stakewise (SWISE) – have seen their prices surge into double digits over the past week.

The biggest liquid staking winners over the past week. Source: CoinMarketCap

Data from Defi Llama also shows that Ethereum remains the top protocol as measured by total value locked (TVL), with $23.06 billion worth locked across the various dApps hosted on the network.

And with data from Messari showing that Ether has a staking ratio of 14%, which is the lowest among Layer 1 coins, there is ample room for growth when it comes to staking ratio. ‘ether, which could help boost the price if more tokens are locked onto the network.

Grayscale Trust Struggles

A remaining black spot for both Ethereum and Bitcoin has been the performance of their respective Grayscale Trust products, which have struggled to hold their value against actual BTC and ETH.

Data from Coinglass shows that the discount for the Grayscale Ethereum Trust (ETHE), which is a traditional investment vehicle that provides institutional investors with passive exposure to the price of Ether, is currently at -59.3%, its lowest level in history.

ETHE’s discount to NAV has been declining since late 2020, but accelerated in the fourth quarter of 2022 as the fallout from FTX spread. In June 2020, the premium for ETHE peaked at nearly 950%, further underscoring the decline in popularity the product has seen over the past two and a half years.

In comparison, the Grayscale Bitcoin Trust (GBTC) is currently trading at a discount of 45.17%, which is better than the discount for Ether but still represents a significant divergence from the price of actual BTC.

Going forward, the performance of Grayscale Trust products will likely depend on a number of factors, including whether the crypto market can rebound from its disastrous performance in 2022 and whether Ether and Bitcoin exchange-traded funds (ETFs) will be approved. for listing on the US market.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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