Top 10 Metrics for Understanding the Ethereum Blockchain
With the specter of Bitcoin’s 2020 halving and the arrival of the Ethereum 2.0 blockchain in a matter of weeks, the cryptoeconomy has started to turn bullish once more.
Moreover, with the recent buy pressure around BTC and ETH has come a renewed surge of mainstream attention around these top public cryptocurrencies. That means there is and likely will be for the foreseeable future an influx of new crypto users who are looking to catch up from the ground floor.
With that said, crypto rookies can always use all the helping hands they can get, and the top smart contract platform Ethereum can oftentimes be hard for beginners to wrap their heads around. As such, it’s important to know where to start when it comes to analyzing this kind of public blockchain.
In this post, then, we’ll examine 10 of the most basic, fundamental metrics you can use to grasp the health of the Ethereum network at any given time. This list is hardly comprehensive, but it’s certainly a hearty start for newcomers.
Market Capitalization
Market cap is fundamental in showing just how “big” Ethereum is at any time.
You can arrive at the figure by multiplying the outstanding sum of tokens — presently over 110 million for ETH right now — by whatever the current ETH price is. At the time of this article’s writing, the ETH price was roughly ~$187, so the cryptocurrency’s market cap is over 20 billion USD.
That puts ETH squarely behind BTC as the biggest crypto in the cryptoeconomy at the moment. Ethereum’s all-time high market cap was over $131 billion back in January 2018 amid the ecosystem’s last bull run.
Interestingly, Ethereum is now probably 10 times as technologically promising as it was two years ago, and yet its market cap is now considerably smaller than it was then. This is a key metric to watch going forward, accordingly.
Ethereum Daily Transactions
Another major metric that’s generally indicative of how popular Ethereum is at any given time is the blockchain’s daily transactions, of which Etherscan.io has an excellent tracker dashboard.
Of course, Ethereum is teeming with automated smart contracts, so the count of daily transactions is hardly equitable with daily users. Even still, though, the metric provides an insightful vantage point for how much activity is taking place atop Ethereum.
Per Etherscan, the platform’s lowest number of transactions came on August 9th, 2015, when Etheruem facilitated just 1,329 transactions. The blockchain’s most bustling day came on January 4th, 2018 — the cryptoeconomy’s last peak — when 1,349,890 transactions were facilitated on the day.
The platform is currently powering around 880,000 transactions per day at the time of this article’s writing.
DEX Activity
One of the early hits of the Ethereum blockchain has been decentralized exchanges. They’ve been popular precisely because they allow users to trade assets in non-custodial fashion.
Can these DEXes continue to eat into the volumes of centralized exchanges like Binance and Coinbase? That remains to be seen. But Ethereum’s upstart leading exchanges have proven up for the challenge to date, and thus you’ll certainly want to closely track DEX activity going forward. Etherscan’s Top DEX Tracker Statistics page is quite useful here.
Total Stablecoin Supply
Beyond decentralized exchanges, one of Ethereum’s other breakout sectors has been stablecoins — tokens that are typically pegged to a fiat currency to provide price stability to crypto traders in the highly volatile cryptoeconomy.
There are many rising Ethereum-based stablecoins, including the Dai, USDC, sUSD, Tether, and more. In recent days, the total stablecoin supply has reached over the $10 billion USD mark
TVL in DeFi Smart Contracts
Ethereum’s decentralized finance sector has proven to be an early breakout success for the top smart contract platform, but how best to understand how DeFi is doing? For that, you’ll want to understand the total value locked, or TVL, in DeFi smart contracts, e.g. popular lending dApps like Maker or Compound.
Pioneered as best I can tell by the DeFi Pulse tracker website, the TVL metric has much more important in recent months. For the first time ever earlier this year, ETH’s TVL reached over $1 billion. The blockchain’s now just $100 million shy of that mark at the time of this article’s writing.
Gas Prices
Some folks don’t like equating ETH to oil, but in some regards they’re similar. The more ETH is in demand the higher it costs to transact in it, just like is true if oil is in high demand.
With that said, depending on network congestion levels, Ethereum is sometimes cheap to use, and it’s sometime expensive to use. In the future as more scaling technologies get rolled out, these usage costs are set to drastically drop. Even still, though, Ethereum gas prices are a major metric to watch for the foreseeable future.
Account vs. Gas Used
Sometimes the Ethereum network is overly-congested from just a single Ethereum address, which can skew the blockchain’s stats all around. In such an instance, it’s useful to know how to parse the Ethereum platform’s biggest “gas guzzlers” at any given time.
For that, there’s the ETH Gas Station website. The site provides detailed information on the biggest daily gas users atop Ethereum. If you ever see that gas prices seem unusually high, check out the ETH Gas Station to figure out what’s going on.
ETH Supply Growth Chart
Bitcoin is clearly deflationary in currently being capped at 21 million BTC, but Ethereum is inflationary for now, though it bears the potential to go net deflationary in the future.
With such monetary matters in flux then, it’s important to track the total ETH supply growth to monitor Ethereum’s inflationary — or perhaps soon to be deflationary — activity.
Etherscan’s “Ether Supply Growth Chart” page is seminal in this regard. Follow this page to stay up to date on Ethereum’s inflationary rate.
NFT Ecosystem Market Cap
Behind the DeFi sector, one of Ethereum’s most promising arena’s yet is the non-fungible token (NFT) sector.
NFTs can power digital art, collectibles, games, and more, and Ethereum is dominating the NFT space to date. That means that beyond stablecoins and DEXes, NFTs are a huge area of interest for Ethereum stakeholders going forward.
There are a few websites to track NFT activities through to date, but one of the bests so far is NonFungible.com. The site tracks the market history of all major NFT projects.
To Come? Number of ETH Staked
Ethereum is currently a proof-of-work (PoW) blockchain, but its miners will soon be replaced by “stakers” in Ethereum’s imminent 2.0 system. At that point, users will be able to stake their minimum requirement of 32 ETH in special wallets rather than buying and running expensive mining gear.
Going forward, then, one of the biggest metrics for Ethereum will be “how many ETH are staked in Ethereum 2.0.” This blockchain metric is set to fluctuate just like how any blockchain metric typically does, though just because it’s not static doesn’t mean it won’t be useful.
As such, the amount of ETH staked will be a major metric to watch in the Ethereum ecosystem in the years ahead. That number will surely go up and down over time, but it’s an important benchmark to track regardless.
Ethereum still has plenty of room for upside, but users will want to see continued significant activity among these aforementioned metrics to be seriously sure that Ethereum is performing healthily.
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OhNoCryptocurrency via https://www.ohnocrypto.com/ @William M. Peaster, @Khareem Sudlow