Ethereum usage declines, taking price with it
Major decentralised finance (DeFi) protocols on the Ethereum network, including Uniswap and Curve, have seen their weekly users dip substantially.
- ETH's ongoing volatility has resulted in the altcoin's price oscillating wildly since 13 May.
- The total market cap of the digital asset industry has dipped by 13% over the last couple of weeks.
- The Web3 industry has been able to rake in AUD$4.22 billion (US$3 billion) worth of funding over the last 30 days, reports suggest.
Ethereum's price action has remained in lock-step with the crypto market, with the altcoin exhibiting weekly losses of 4%. ETH is currently trading at AUD$2,817 after having dipped to a relative low of AUD$2,700 yesterday.
ETH's continued movements between AUD$2,650 and $3,000 over the last 12 days – representing a volatility ratio of 13% – have resulted in more and more capital moving out of the digital asset sector. The latest iteration of CoinShares' weekly Digital Asset Fund Flows study notes that $141 million worth of investments exited the space between 13 and 20 May. This trend could continue into the future, potentially taking the price of ETH lower.
Network activity associated with Ethereum slipped by 27% in comparison to last week. Active addresses related to ETH decentralised applications (dApps) are dropping as well, with Uniswap V3 (UNI) losing 24% and Curve (CRV) losing 52% of their weekly users. These poor technicals suggest that ETH may not be close to breaking its crucial $2,150 resistance anytime soon.
The total market capitalisation of the crypto sector lies at AUD$1.86 trillion, down 13% over the last 14-day stretch. ETH's valuation stands at AUD$340 billion (US$242 billion) while representing a market share of 18.07%.
Web3's utility far exceeds the realm of just blockchain tech
While the term Web3 has gained an increasing amount of traction in recent months, Polkadot founder Gavin Wood stated in a recent interview that its application and utility stretch far beyond the realm of just blockchain. Speaking at the World Economic Forum's annual meeting in Davos, Switzerland, Wood was quoted as saying:
"I don't think Web3 needs to evolve, really, from its origins too much yet but maybe in the future, it will.
"I don't want to hope or have blind faith that the service I'm using is operating correctly or dealing with my data correctly and not being hacked," he added.
Projects within the Web3 space have continued to accrue a lot of attention from venture capital firms, with the Web3 gaming and metaverse niches alone having drawn in over AUD$4.22 billion (US$3 billion) worth of funding over the last 30 days. The digital asset sector as a whole has been able to rake in nearly AUD$21 billion (US$15 billion) worth of investment over Q1 2022, around 50% of last year's cumulative investment.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.