- Ethereum grew in terms of market cap dominance despite industry volatility.
- Interest in staking increased and traders turned bullish.
During Q2 in 2023, Ethereum[ETH] facing significant swings and high volatility. Despite these challenges, the Ethereum network showed resilience and continued to attract an influx of new users to its protocol. It was striking that the platform showed substantial growth in various areas during this period.
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A show of dominance
According to Messari’s data, regulation has been the central theme dominating the short-term narrative surrounding Ethereum. The SEC’s actions against major exchanges such as Coinbase and Binance have raised concerns about the classification of assets as securities. Despite these challenges, ETH managed to increase its dominance in the market.
However, there is hope that with Markets in Crypto Assets (MiCA) in Europe, Ethereum’s market cap will increase even further as adoption begins to ramp up.
For context, MiCA is part of a wider EU package aimed at updating the bloc’s approach to various digital finance aspects. MiCA focuses primarily on providers of crypto assets and the reporting obligations they must submit.
Source: Messari
ETH’s strong tokenomics also played a critical role in boosting performance. Base fee burn saw a significant 58% increase during the quarter, burning around 380,000 ETH.
This mechanism helped reduce the overall supply of ETH, creating scarcity and potential upward price pressure. In addition, net ETH burned also witnessed a remarkable three-fold increase, from about 80,000 to about 230,000.
Source: Messari
Risk it until you make it
The surge in gas prices, propelled by the excitement surrounding PEPE, has been the driving force behind ETH’s higher burn. As a result, validators saw their real returns rise to an impressive 6.1%.
This increase in revenue, in combination with the opening up of stocks, naturally led to more inflow into stock contracts. May and June saw the highest net flows ever, with 3 million and 1.9 million ETH respectively, further contributing to the growth and engagement of staking within the Ethereum network.
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In addition, the number of validators on the Ethereum network also increased. According to Staking Rewards data, the number of validators on the Ethereum network has grown by 8.81% over the past month.
Source: Staking Rewards
Due to these factors, traders were optimistic about the future of ETH. This was indicated by the falling put-to-call ratio for ETH, which indicated that the number of calls was higher than the number of puts at the time of writing.
Source: The Block
