Key Points
- Grayscale Ethereum Trust (ETHE) experiences its first day without net outflows on August 12, 2024.
- Increased activity on the Ethereum network and its layer 2 solutions may signal renewed investor confidence.
The Grayscale Ethereum Trust (ETHE) marked an important milestone on August 12, 2024. For the first time, the trust saw no net outflows, a significant event that coincided with a noticeable uptick in on-chain activity within the Ethereum ecosystem.
This could suggest a possible turnaround for the fund, which has faced significant challenges since its establishment, including a loss of nearly $2.3 billion in Ether. This amounts to over 25% of its original $9 billion in holdings.
ETHE Performance Compared to GBTC
In comparison, Grayscale’s Bitcoin Trust (GBTC) took nearly four months to achieve a similar feat without outflows. The cessation of ETHE outflows correlates with a marked increase in activity on the Ethereum network and its layer 2 solutions. This might indicate a potential resurgence of investor confidence in the Ethereum ecosystem.
Ethereum Layer 2 Activity Surges
Data from DefiLlama shows a positive trend in decentralized exchange (DEX) trading volumes on Ethereum and its layer 2 networks, such as Base. These networks have seen a 12% and 11% increase, respectively, in the past 24 hours. By contrast, trading volumes on Solana-based DEXs have dropped by 10% during the same period.
Uniswap, a prominent Ethereum-based DEX, recorded a record number of new monthly addresses created on layer-2 networks in July. Data from Dune Analytics reveals an impressive 8.65 million new addresses, almost double the 4.93 million added in June.
In addition to DEXes, layer 2 solutions are attracting significant user bases. Crypto analyst Leon Waidmann highlighted this in an August 9 post, pointing out that Base and Arbitrum boast 2.64 million and 1.37 million weekly active users, respectively.
According to L2Beat data, 73 Ethereum layer 2 solutions together processed 298 transactions per second (TPS) on August 12th. This figure is just 34 TPS shy of the all-time high of 332 TPS, achieved on July 18.
The total value locked (TVL) across all Ethereum layer 2 solutions currently stands at $37.7 billion, highlighting their growing significance within the DeFi landscape. Despite this, Ethereum’s mainnet still holds the larger share, with a TVL of $85 billion.
Implications for Ether Price
Several analysts view the slowdown in ETHE outflows as a potential catalyst for Ether price in the coming months. They suggest that ETH’s price trajectory may mirror that of Bitcoin following the approval of its spot ETFs, which also experienced initial outflows from GBTC.
While the early days of ETHE have been turbulent, the recent surge in Ethereum network activity offers a glimmer of hope. Whether this translates into long-term price appreciation for Ether remains to be seen, but the renewed investor interest is undeniable.
