Ethereum is best described as a decentralised computer for the world. But what can you actually do with Ethereum and which applications are currently popular? We will answer these questions by analysing the gas consumption, and the transaction costs on the platform.
What does gas consumption mean?
To make a transaction on Ethereum or to use a decentralised application, you need ethers. You pay these ethers to miners to record your transaction in the blockchain. In essence, it is a transaction fee, but in the industry, we call it ‘gas’ because it acts as Ethereum’s petrol.
So the distribution of gas consumption tells us which applications are currently popular and what is available on Ethereum. Of course, in reality, Ethereum is a little more complex than how it is described here, but in essence, it comes down to this explanation. Now let’s look at which applications are currently consuming the most gas.
The rotation from DeFi to NFTs
For a long time, DeFi applications like the 0x protocol and MakerDao dominated Ethereum’s gas consumption. Today, what we see is that more and more capital is flowing from the DeFi world toward NFTs. OpenSea, in particular, has become a major player in 2021 and 2022. We can also clearly see the impressive rise and dominance of Uniswap in the chart below.
Uniswap is a decentralised exchange platform that clearly beats the other decentralised exchanges at the moment. Looking at it by category, in 2022, decentralised exchanges (38.4 per cent) and NFT marketplaces are the big winners when it concerns gas consumption on Ethereum.
After those two categories, NFT collections and stablecoins also emerge as popular applications. Next, we see that the share of gas consumption in each category is decreasing significantly. Loan protocols, stablecoins, and others are still relatively small on Ethereum. However, in theory, they have the potential to blow up considerably.
The rise of stablecoins
During the DeFi summer of 2021, Tether’s gas reached an all-time high on Ethereum with 2,140 ether. Circle’s USD Coin also peaked at that time. However, the all-time high for USDC followed only later in 2021 when ether, itself, reached its provisional all-time high in November.
The fact that Tether and USDC are important projects for Ethereum is evidenced by the huge amounts of stablecoins they hold on Ethereum. Tether has about EUR 32 billion worth of assets living on Ethereum, and USDC has almost EUR 45 billion. This makes these two projects real giants on the Ethereum blockchain.
The largest smart contracts on Ethereum
If we look at the biggest smart contracts on Ethereum, Uniswap is undoubtedly the big winner. Currently, Uniswap is responsible for 37.2 percent of the total gas consumption on Ethereum. Uniswap is closely followed by OpenSea (8.8 percent) and Tether (6.7 percent).
It is notable that Tether is responsible for a larger gas consumption than USDC, while the latter is currently larger on Ethereum. We hope these charts and information give you a better idea of what is currently going on on Ethereum. At the end of the day, it is all about what you can do on and with Ethereum.
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Steven Gray is an experienced cryptocurrency and blockchain journalist with over 7 years of reporting on the crypto industry across major publications. His proficiency in technical analysis provides him the skills to evaluate complex trading algorithms and AI systems. Steven leverages his extensive network of academics and finance professionals to incorporate expert opinions into his unbiased analyses.
Known for his engaging yet objective writing style, Steven keeps readers informed without hype. His rare blend of crypto domain knowledge, trading acumen, impartiality, and communication skills makes him an ideal author for in-depth reviews of innovations across the cryptocurrency and financial technology sectors.