“Ethereum’s overwhelming activity helps explain why its users were willing to pay an average of more than $15 million per day just to use the blockchain,” a16z said.

Crypto venture capital giant Andreessen Horowitz (a16z) emphasized that the development and demand for Ethereum is “unprecedented” despite the network’s high transaction fees.

However, the company warns that its “popularity is also a double-edged sword” as Ethereum prioritizes decentralization over scaling, leading to competing blockchains stealing market share with “promises of better performance and lower fees.”

The comments came via a blog post presenting a16z’s 2022 State of Crypto Report, which featured the company’s data scientist, Daren Matsuoka, head of protocol engineering and development, Eddie Lazzarin, general partner Chris Dixon, and head of the Content, Robert Hackett, collaborated to provide five key insights from the study.

Besides Ethereum, the report focuses on topics such as Web3 development, cryptocurrency adoption rates, decentralized finance (DeFi) and stablecoins.

According to the data from the report, Ethereum outperforms the competition in terms of developer interest with around 4,000 monthly active developers on the network compared to Solana which came in second with 1,000. Bitcoin and Cardano are next in line at around 500 and 400 respectively.

Analysts noted that “Ethereum’s leadership is largely due to its early launch and the health of its community,” but emphasized the importance of the network’s continued rapid development despite high transaction costs:

“Ethereum’s overwhelming activity helps explain why its users were willing to pay an average of more than $15 million per day just to use the blockchain – remarkable for such a young project.”
Demand for Ethereum is also reflected in transaction settlement fees charged on the blockchain over the seven days beginning May 12. The data shows that Ethereum accounts for $15.24 million. For comparison, BNB Chain, Avalanche, Fantom, Polygon, and Solana total around $2.5 million in total fees.

Transaction Fee Level 1: a16z
The report notes that Tier 2 scaling solutions are struggling to lower Ethereum fees and speed up transactions, and notes that long-awaited Ethereum upgrades are coming to make the network more efficient and cost-effective.

However, the “long-awaited” upgrades can’t come soon enough, and a16z also highlighted in the report that, on average over the 30 days starting May 12, active addresses and transactions on competing blockchains, including Solana, BNB Chain, and Polygon, are already up are gone before Ethereum.

Related: Ethereum analytics firm Nansen acquires DeFi tracker Ape Board

The data shows that Ethereum has 5.5 million active addresses, representing 1.1 million daily transactions, while Solana has 15.4 million active addresses and 15.3 million daily transactions. The BNB network comes third with 9.4M and 5M, while Polygon comes in at around 2.6M and 3.4M. Analysts concluded that the winner takes all:

“Blockchains are the powerhouse of the new computing wave, just like PCs and broadband in the 90s and 2000s and cell phones in the last decade. There are many opportunities for innovation and we believe there will be multiple winners.”
Other key takeaways from the report include the total fixed value of the DeFi sector at around $113 billion, making it the 31st in revenue for creators to date.

Source: CoinTelegraph