JPMorgan: Ethereum Upgrades Haven’t Driven Significant Growth in Network Activity
Despite a series of recent upgrades, Ethereum’s network activity has not experienced any meaningful increase, according to a new research report from JPMorgan.
Analysts led by Nikolaos Panigirtzoglou highlighted that neither the daily transaction count nor the number of active addresses showed substantial growth following the latest network improvements.
However, the bank noted that total value locked (TVL) on Ethereum did see some growth between the March 2024 Dencun upgrade and the more recent Pectra update in early May. This increase is likely driven by heightened lending and borrowing activity on decentralized exchanges (DEXs), although the rise in TVL measured in dollar terms appears smaller compared to the growth in Ethereum’s native token, ETH.
The Pectra upgrade, activated on May 7, focuses on streamlining staking processes, enhancing wallet functionality, and improving network efficiency. JPMorgan acknowledged that these enhancements make Ethereum and its native token more attractive to institutional investors and help differentiate the network from competitors. Still, these technical advancements have yet to translate into significantly higher user engagement or transaction volume.
Following the Dencun upgrade, average and total network fees declined, partly due to increased use of layer 2 scaling solutions. Meanwhile, Ethereum’s circulating supply expanded after Dencun, prompting concerns about ETH potentially becoming an inflationary asset amidst stagnant transaction activity.
The report also pointed to futures market data indicating that institutional investors have been a major force behind the recent surge in ETH’s price, which has climbed over 45% in the past month, according to CoinDesk data.
