Ethereum Network Activity Crashes, Transaction Volume Down To A Five-Month Low

The negative sentiment around Ethereum appears to be significant as evidenced by current data which shows that the ETH network is exhibiting a noticeable decrease in activity, with its number of transactions falling to its lowest level in the past 5 months. This drastic decline coincides with a larger downswing in the cryptocurrency market, marked by a reduction in investors’ interest and trading activity.

Ethereum Main Chain Sees Lesser Engagement

TOBTC, a trading platform disclosed the negative development to the crypto community on the X (formerly Twitter) platform. Given the broader bearish outlook of the market, the drop in activity raises questions about the prospects of Ethereum in the short term.

It is noteworthy that the decline comes after ETH witnessed its highest transaction count in nearly two years. In January, the network saw a whopping 36.02 million monthly transactions being executed on ETH’s mainnet. However, it seems users might be looking at other alternatives for their day-to-day activities.

According to the trading platform, there has been a slowdown in activity on Ethereum, suggesting a shift in users’ adoption of the network. Specifically, the seven-day moving average settled at 1.12 million transactions in a day, a level not witnessed since February. This represents the lowest transaction count recorded on the network over 5 months.

Ethereum reduction in transaction count may have impacted the network hugely, however, TOBTC noted that the development does not solely contribute to the slowdown in activity. The slowdown has also been triggered by the network’s active wallet addresses, which have decreased to about 400,000, as cited by TOBTC.

TOBTC further highlighted that while the main chain appears to be taking a break, Ethereum layer 2 solutions are filling up all of the slack, drawing attention to the Base network, a layer 2 solution supported by Coinbase. This is due to the network’s position as one of the leading solutions, with a remarkable 3.83 million transactions in a single day.

Base‘s surge in transactions simply highlights layer 2 solutions as a preferable choice of operation to the Ethereum mainnet among users, as these networks provide far less expensive and speedy transactions while retaining Ethereum’s strong security features.

Layer 2 Solutions Close To Solving Interoperability Problems

As the web3 ecosystem evolves, interoperability across distinct networks has been a major problem in the landscape. However, Vitalik Buterin, the co-founder of Ethereum, believes that ETH layer 2 networks are on the brink of resolving these long-standing ecosystem-wide issues.

In the X post, Buterin stated that many people will be amazed at how quickly cross-L2 interoperability problems will go away and the Ethereum universe becomes a seamless place to use. Buterin is confident that these problems will cease to exist soon due to the increasing desire and shared determination he has observed within the ecosystem lately.

The co-founder’s remarks demonstrate his strong belief in the ability of layer 2 solutions to improve the decentralized environment and transform blockchain interoperability.

Featured image from Adobe Stock, chart from Tradingview.com