Q2 Summary of Ethereum in 2023
- Despite volatility, ETH managed to increase its dominance in the market.
- ETH tokenomics showed strong growth with a 58% base fee burn.
- Staking interest rose due to higher yields and unlocking of staking contracts.
Market Cap Dominance
Ethereum managed to grow in terms of market cap dominance despite volatility in the sector. According to Messari’s data, the central theme dominating the near-term narrative around Ethereum was regulation. The SEC’s actions against major exchanges like Coinbase and Binance raised concerns about assets’ classification as securities. Despite these challenges, ETH managed to increase its dominance in the market. With Markets in Crypto Assets (MiCA) in Europe, Ethereum’s market cap dominance is expected to rise even further as adoption begins to rise. MiCA primarily concentrates on crypto-asset providers and the obligations they need to declare.
Ethereum’s strong tokenomics also played a pivotal role in driving its performance. The base fee burn experienced a substantial surge of 58% during the quarter, leading to approximately 380,000 ETH being burnt. This mechanism helped reduce the overall supply of ETH, adding scarcity and potential upward price pressure. Additionally, the net ETH burnt also witnessed a remarkable threefold surge, rising from around 80,000 to approximately 230,000.
Increased Staking Interest
The surge in gas prices propelled by the excitement surrounding PEPE was the driving force behind higher burn of ETH . As a result, validators saw their real yields rise to an impressive 6.1%. This increase in yields coupled with unlocking of staking naturally attracted more flows into staking contracts. May and June observed highest ever net flows with 3 million and 1.9 million respectively entering staking contracts during each period..