A Coinshares report has revealed that the role of Ethereum (ETH) in crypto is being shaped by two main pillars: marketplaces and stablecoins.
However, while the network is making waves in these areas, the path forward for new applications remains unclear.
Decentralized Exchanges Dominate
The report, released on September 24, indicated that marketplace and stablecoins made up slightly more than half of Ethereum’s current use cases. Decentralized Finance (DeFi) protocols and the booming stablecoin market are the key drivers of the trend, highlighting Ethereum’s role as the backbone infrastructure for so many crypto projects.
Per the study, marketplaces such as decentralized exchanges (DEXs) and Non-Fungible Tokens (NFT) platforms have cemented the network’s position as the go-to blockchain for tokenized assets.
Uniswap alone accounted for at least 15% of transaction fees generated on Ethereum in the first half of 2024. The OpenSea NFT marketplace was also identified as a key contributor to fees on the blockchain, although its significance has shrunk markedly after it reached a high of $572 million in H1 2022.
Additionally, the survey noted that more than $135 billion worth of stablecoins are currently circulating on Ethereum, including the two largest by market capitalization, Tether (USDT) and USD Coin (USDC).
These digital assets rely on the blockchain’s framework to maintain their peg to fiat currencies while adding liquidity to DeFi platforms and making cross-border payments seamless.
Ethereum Challenged to Find Sustainable Use Cases
These positives notwithstanding, the Coinshares report raised an important question: what comes next?
Analysts believe that the network’s latest upgrades, including its transition to Proof-of-Stake (PoS) and the ongoing development of Layer 2 (L2) scaling solutions, have put it in a good position for future growth. Still, future innovations remain speculative, and the demand for new decentralized applications (dApps) is uncertain.
CoinShares suggests that Ethereum’s future success could hinge on its ability to surpass its current use cases. The network’s potential for enterprise adoption, gaming, and metaverse-related innovations exists, but real-world demand and implementation are key. Ethereum will need to attract developers to push the boundaries of what blockchain technology can offer in everyday life.
In a summary of the findings posted on X, James Butterfill, head of research at the crypto asset manager, stated that the value of ETH is primarily driven by “demand for Ethereum transactions” or how much users are willing to fork for services on the network, rather than factors such as staking yield.
The report added that most transaction fees on the network are generated via a “very small set of services,” which largely consist of speculation or simple value transfers. As such, Butterfill submitted that the network must focus on creating “sustainable on-chain utility” to secure its long-term value.
