A consecration for Ethereum (ETH)? The network transited more money than Visa over the course of 2021, and now far exceeds Bitcoin (BTC). We take a look back at the reasons for this meteoric rise.
Ethereum’s transaction volume exceeds Visa’s in 2021
As a reminder, the Ethereum network only surpassed the Bitcoin network in terms of volume processed in mid-2020. Since then, the growth has been particularly rapid, with Ethereum moving $11.6 trillion in 2021, compared to $10.4 trillion for the Visa network, according to a report released by Josh Stark of the Ethereum Foundation.
The report notes that the actual volume processed by Ethereum is actually higher, with this figure only taking into account major ERC-20 tokens with a transaction volume exceeding $500 million. It is now twice as high as Bitcoin, which processed $4.6 trillion in 2021.
The reasons for this breakthrough
Among the reasons for this breakthrough in volume handled by Ethereum, we can of course cite the explosion of certain use cases, including non-fungible tokens (NFT) and decentralized finance (DeFi). For example, the report notes that the total value locked (TVL) on Ethereum reached $153 billion in 2021. That’s more than the assets under management of investment fund Bridgewater Associates, or financial service Robinhood.
Recent data published by DeFi aggregator Llama tends to confirm the trend, although it is noted that other blockchains are increasingly present in the DeFi sector.
Another important element is transaction fees. They remain high on Ethereum, but that doesn’t seem to be holding back users, who paid $9.9 billion in fees during 2021, compared to $1 billion at Bitcoin.
Comparing Ethereum’s volumes and locked-in values with other sectors shows how much the network has grown in recent months. We can also see this with the capitalization of Ether (ETH), Ethereum’s native cryptocurrency. It now trails Visa’s competitor, Mastercard. The latter is currently worth $319 billion, compared to $303 billion for ETH, according to Infinite Marketcap data.
The next step for Ethereum is, of course, the long overdue move to proof-of-stake. Currently, $23.9 billion in ETH is locked into Ethereum’s staking contract, but that’s only about 8% of the supply. So that’s another huge change for investors in the coming months.
