Only 3.55% of Active Ethereum (ETH) Wallets Are Interacting with DeFi

The liquid supply of Ether meanwhile continues to decline as ETH reserves on exchanges drop to late 2018 levels, and an increasing amount of the crypto asset continues to get locked.


While the price of Ether trades around $1,800, the amount of Ether on centralized cryptocurrency exchanges continues to decline to late 2018 levels. Ether supply on exchanges has been going down ever since May 2020.

Unlike ETH, Bitcoin reserves on exchanges have been going up and down this year.

ETH: All Exchanges Reserve

Source: CryptoQuant

Declining Ether reserves is yet another positive driver for the prices, which is up 145% YTD compared to Bitcoin’s 90% during the same period. However, since February, Ethereum has been underperforming Bitcoin with just under 40% uptrend compared to Bitcoin’s about 67% rally. BTC -0.73% Bitcoin / USD BTCUSD $ 47,695.39
-$348.18-0.73%
Volume 32.4 b Change -$348.18 Open $47,695.39 Circulating 18.82 m Market Cap 897.52 b
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Moreover, the leading digital asset hit an all-time high of around $62k this past weekend, which is 210% higher than the previous ATH of $20k, while Ether has only managed to rise only 45% to $2,050 in late Feb. from its 2017 high of $1,420.

This could be taken as Ether having a lot of upside to experience as the second-largest cryptocurrency usually outperforms Bitcoin as it did in the 2017 bull run.

The declining supply of Ether on exchanges could help the prices cover this lost ground along with the Ethereum Improvement Proposal (EIP) 1559, which will burn the fees paid in Ether, further reducing the available supply.

According to Ethereum co-founder Vitalik Buterin, this could make Ether “ultrasound money” to Bitcoin’s sound money, as, “If demand to use Ethereum is high enough, then there would actually be more ETH being destroyed than is being created.”

Currently, there are more than 143 million ETH addresses, increasing by over 150k per day, as per Etherscan. Also, 45 million addresses have more than 0 ETH balance.

Out of total addresses, only 3.55% of active ETH wallets, 1.62 million unique users are interacting with decentralized finance (DeFi) that is despite the ongoing mainstream adoption of NFTs (non-fungible tokens).

Currently, there are over 3k decentralized applications, 80.7% of the total, on the Ethereum network.

A good 7.8% of Ether’s circulating supply, 9 million ETH, is also locked in the DeFi sector. Just over 3.5 million ETH are also locked in the deposit contract for ETH 2.0, while another 3.17 million ETH are with Grayscale as institutional investors get interested in Ether. Earlier this month, Chinese publicly-listed company Meitu also bought 15k ETH.

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