How Layer 2 Is Primed To Solve Scalability Issues of Ethereum before the Launch of ETH 2.0
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The proof that there has been a drastic decrease in the selloff of Ethereum (ETH) via exchanges has just been shared by the blockchain analytics firm, Santiment.

The report stated that the supply ratio of Ethereum (ETH) on exchanges has hit the lowest since 2018.

The current bull cycle has taken Bitcoin (BTC), the largest cryptocurrency by market cap, past its price all-time highs, while Ethereum (ETH), the second-largest digital currency, is inching closer to break price records.

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So, the metric recently provided by Santiment is bullish for Ethereum’s further upside trend. It indicates that ETH holders now prefer to keep their assets for a long time.

Ethereum (ETH) Exchange Supply Ratio Is Dropping Significantly

Ethereum’s supply ratio measures the amount of available ETH on crypto exchanges. It continues to drop, reaching levels not seen since 2018

Santiment tweeted, “The ratio of Ethereum tokens sitting on exchanges continues to decrease & move to offline holder wallets. At just 22.06% of tokens on exchanges compared to 26.33% five months ago, this continues to be one of the most promising signs for $ETH bulls.”

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The data presented suggest that Ethereum will continue to move off exchanges. It most likely ends up in wallets where it will be held or spent as gas for decentralized finance (DeFi) or other decentralized apps (dApps)

Users may be transferring ETH to cold storage wallets as long term investments. On the other hand, they could be using it to facilitate a variety of other applications based smart contract.

Decentralized Finance (DeFi) Drives Users to Ethereum (ETH)

In 2020, there was a breakout in the use of decentralized finance (DeFi). The total value locked (TVL) grew from $600 million to around $25 billion. This development increases the demand for ETH, the digital token that acts as gas for the Ethereum ecosystem.

Read Also: Amidst Bitcoin Recent Price Surge, Crypto Whales Are Busy Hodling These Six Ethereum-Based Digital Assets

This record growth in the use of DeFi aided the Ethereum network to attain yearly record highs for transaction fees generated. Due to this performance, Ethereum was able to overtake Bitcoin by 83% in 2020. This increased use in DeFi implies that users needed more ETH to complete their transactions.

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Solomon Odunayo

By Solomon Odunayo

Solomon Odunayo is an accomplished blockchain and cryptocurrency expert at Herald Sheets, known for his in-depth analysis and engaging articles that cater to both beginners and experienced readers. With a degree in Computer Science from the University of Lagos, Solomon leverages his technical background and keen understanding of the crypto space to provide readers with valuable insights and up-to-date news. His passion for innovation and commitment to staying current with industry developments make him a trusted voice in the digital currency community.