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ETH supply ratio on a steady decline

Cryptopolitan


TL;DR Breakdown

  • ETH ratio of supply has dropped massively in recent times.
  • Increased DeFi users would lead to more demand for the second-largest crypto asset.

Ethereum’s ratio of supply has dropped massively. The ratio of supply is a metric used to measure the total available token on crypto exchanges. According to Santiment, the last time it was a record low in November 2018. 

The crypto analytic site noted that the amount of ETH on these exchanges was dwindling, and it was moving to offline older wallets. Only 22 percent of the token supply is on the exchanges, whereas the figure stood at 26 percent as of recent as five months ago. This, they believe, shows one of the promising signs of the second largest crypto asset.

This data suggests that the asset would continue to be moved off the exchanges as it would either end up in wallets where it would be hodl or spent as gas for decentralized finance (DeFi). There is also the possibility of market players transferring the asset to their cold storage wallets for long term investments. And they might just be using the asset as a means of facilitating the quite large numbers of smart contracts that are running on the network.

DeFi is driving more users to ETH

In the last year, one undeniable truth is that DeFi has grown massively within the period. The total value locked in the industry has grown to over $20 billion within this period as more users, and more investors are beginning to take notice of the sector.

And since ETH serves as the gas for the ecosystem that powers the DeFi ecosystem, this has led to an increased demand for the asset. Hence, increase usage of DeFi would only lead to the need for more Ether to complete transactions.

Ethereum was able to generate more transaction fees than Bitcoin, which is primarily due to DeFi applications’ usage. 





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