A consecration for Ethereum (ETH)? The network moved more money than Visa in 2021, and now far outstrips Bitcoin (BTC). We come back to the reasons for this meteoric progression.
Ethereum’s Transaction Volume Surpasses Visa’s in 2021
As a reminder, the Ethereum network only exceeded the Bitcoin network in terms of volume processed in the middle of 2020. Since then, progress has been particularly rapid: Ethereum has made it possible to transit 11,600 billion dollars in 2021 , compared to 10.4 trillion for the Visa network, according to a report by Josh Stark of the Ethereum Foundation:
Figure 1: Ethereum, Visa and Bitcoin transaction volume growth (2021)
The report notes that the actual volume transacted by Ethereum is actually higher, with this figure only considering major ERC-20 tokens with a transaction volume exceeding $500 million. It is now twice that of Bitcoin , which in 2021 processed $4.6 trillion.
The reasons for this breakthrough
Among the reasons for this surge in the volume processed by Ethereum, we can of course cite the explosion of certain use cases, including non-fungible tokens ( NFT ) and decentralized finance (DeFi). The report thus notes that the total value locked (TVL) on Ethereum reached $153 billion in 2021. This is more than the assets under management of the investment fund Bridgewater Associates, or the financial service Robinhood:
Figure 2: Ethereum TVL progression over the year 2021
Recent data published by the DeFi aggregator Llama tends to confirm the trend, although we note that other blockchains are increasingly present in the DeFi sector :
Figure 3: other blockchains are beginning to make their way into DeFi
Another important element: transaction fees. They remain high on Ethereum, but that doesn’t seem to be holding back users, who paid $9.9 billion in fees over the course of 2021 , compared to Bitcoin’s $1 billion:
Figure 4: transaction fees paid in 2021 for different major blockchains
Comparing Ethereum’s locked volumes and values with other sectors helps show how much the network has grown in recent months. We also see it with the capitalization of Ether (ETH), the native cryptocurrency of Ethereum. It is now on the heels of Visa’s competitor , Mastercard . The latter is currently worth $319 billion, compared to $303 billion for ETH, according to data from Infinite Marketcap.
The next step for Ethereum is of course the move to proof of stake, which is long overdue. Right now, $23.9 billion in ETH is locked to Ethereum’s staking contract, but that’s only around 8% of the supply . This is therefore another considerable change that awaits investors in the coming months.
