Will It 10X In The Next Bull Run?

We are seeing a noticeable increase in network activity in the broader Ethereum ecosystem.according to dune analysisExcluding Ordinals-related addresses, there are over 10 million wallets actively involved in mainnet and Ethereum layer 2 solutions such as Base, Optimism, and Arbitrum.

A vibrant Ethereum ecosystem: 10 million active wallets hit

This milestone is a direct result of the successful implementation of the Dencun upgrade in mid-March 2024. This update was one of many other upgrades set for Ethereum that effectively addressed pressing challenges, particularly those related to scalability and gas fees.

Ethereum active wallet per week | Source: Denkun

With the proliferation of active wallets connecting to various protocols deployed on mainnet, sidechains, or off-chain rails, one analyst at X is optimistic. Predict Future bull cycles will see that number expand from 10 million to 100 million. This proliferation was partially fueled by enhancements introduced by Dencun, making layer 2 transactions using rollups cheaper.

To do this, Dencun uses a new transaction type, “blobs,” to store data that is not processed by the Ethereum Virtual Machine (EVM). BLOBs can be thought of as a new data storage channel within blocks that helps streamline block validation. The key is to achieve this without compromising data availability. This greatly enhances the Ethereum Layer 2 solution that integrates Dencun.

TVL across Layer 2 and DeFi protocols is rapidly increasing

Lower gas fees and a more efficient Layer 2 platform have helped Dencun attract new users and energize the broader Ethereum ecosystem. The increase in total value locked (TVL) across Layer 2 portals and mainnet reflects this.

according to L2 beatOn average, leading Layer 2 platforms like Arbitrum and Optimism have seen double-digit increases over the past week. To date, all Layer 2 platforms manage over $39 billion in assets.parallel data DefiLlama’s efforts also highlight this growth. Over the past six months, his TVL for major decentralized finance (DeFi) protocols has increased from approximately $20 billion to over $54 billion at the time of writing.

Ethereum DeFi TVL | Source: DeFirama
Ethereum DeFi TVL | Source: DeFirama

Despite these advances, challenges remain. Ethereum is fragile and cannot scale efficiently whenever usage spikes. Therefore, it is very likely that the next bull market will see gas prices rise, especially if ETH price rises above $4,000 and breaks through all-time highs.

Additionally, users (mainly meme coin deployers) may prefer to use alternatives like Solana or Avalanche, which will curb their activity.

Ethereum price trending sideways on daily chart | Source: ETHUSDT on Binance, TradingView
Ethereum price trending sideways on daily chart | Source: ETHUSDT on Binance, TradingView

Nevertheless, Ethereum supporters remain positive. As crypto prices stabilize and are likely to match the rise in Q1 2024, more users will explore some of the top protocols launched on mainnet or via Layer 2 platforms. You will be enthusiastic about it.

Featured image from Canva, chart from TradingView

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