Ethereum’s Declining Daily Active Users Might Not Affect Price Just Yet

EthereumJust when the community hinged on Ethereum losing ground, the second largest altcoins posted quite a rally along with Bitcoin which subsequently prompted the DeFi tokens to bounce back. ETH posted gains of nearly 190% since the beginning of the year to the press time price of $383.

In the latest news, Ethereum’s daily active address [DAA] metric was on a decline since mid-September this year. This was noted by the blockchain analytic platform, Santiment which further tweeted,

“ETH’s daily active address metric is still revealing that there is still plenty to be desired since its peak in late July. There has been a decline in unique addresses interacting on the Ethereum network, particularly since September 17th.”

Source: Santiment

Prices generally tend to follow DAA count on a long-term time scale over a period of time. Hence, a decline in this metric is often seen as a bearish outlook as demand for the network takes a plunge. However, this could be a good thing for the Ether ecosystem.

The network is plagued with scalability and congestion concerns. The decrease in the network activity, which in turn, could potentially alleviate these concerns.

Why the decline?

The latest downturn in terms of DAA, as depicted in the above chart by Santiment, can be attributed to the yield farming trend of the DeFi phase cooling down. Coingape had previously reported that yield farming, a trend that was once compared with the contentious ICO boom of 2017, has lost steam as the decentralized space saw the foray of different products and offerings.

This could have potentially led to a drop in the demand for network activity. Subsequently, the gas prices have also noted a considerable decline from its local peak during the time of the Uniswap-Sushiswap fiasco as well as the yield farming frenzy days when it created wreaked havoc in the figures. At the time of writing, the average gas price was found to be at 64.19 Gwei as of October 10th, according to the chart below compiled by Etherscan.

Source: Etherscan.io

The average transaction fees which also noted spike to double digits also cooled down to $1.332 at press time.

Bullish Event

The weekend has been bullish for Ethereum and has gained over 8% over the past 7-days as it targeted the previously breached level of $400. Hence, the aforementioned event is unlikely to have much effect on its short-term price.

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