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Ethereum Monthly Analysis – May 2022

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Cryptocurrencies and other risk-on assets saw an overall decline in value last month as most investors moved to the sidelines following a poor display in the first four months of the year, worsened by a heavy slump in the first two weeks of May.

Ethereum, the second-largest cryptocurrency by market capital, wasn’t spared by the bearish wave. The network and its premier altcoin Ether performed relatively poorly in most metrics relative to April. The token has a significantly worse overall display than other months this year. Ether price fell by approximately 50% across May – the highest monthly decline recorded this year. For context, the premier alt shed 27.80% in January and 15.45% across April.

Here’s a detailed look at how Ethereum fared:

Market Metrics

Market capital

Ethereum charted a falling curve in market capital across May, corresponding to the decline of its native Ether token. Ethereum had a market capital of $337.4 billion on May 1, which peaked at $356.2 billion on May 5. The markets slid for much of the remaining days of the month, reaching an initial monthly low of $222.1 billion on May 12, after which the steep decline flattened out towards the end of the month.

On May 27, the Ethereum network recorded the lowest market capitalization of $208.5 billion, the lowest sum for the year. Notably, it was also the first time the largest smart contract platform fell to such levels since August 2021. As of writing, the Ethereum network has a market capital of $ 214,530,9, with a dominance of 17.35% in crypto markets.

Ether’s supply growth

The token supply on the Ethereum network grew positively across May, with the same consistency as other months of the year. Accounting for Ether, including daily block rewards, uncle rewards, uncle inclusion rewards, burnt tokens, and staked tokens, the supply at the start of the month stood at 118,906,787 ETH.

The growth was relatively uniform and steady across the month, reaching 119,218,683 ETH on May 31, which represented a swell of 311,896 tokens. This also meant the increase in the month-over-month changes in token supply growth on Ethereum, given that in April, there were 279,972 ETH more tokens in supply.

Blockchain and Network Metrics

Daily transactions

As token holders rushed to dump their holdings in the markets in the initial days of the market breakdown in May, the number of transactions spiked to record a monthly high. The peak doubled as the second-highest daily count in transactions recorded on any day this year. The apex was reached on May 13, when there were 1,342,405 total transactions.

For the rest of the days, it was ‘story as usual’ with the lowest figure for the month seen on May 7 – 1,051,489 total transactions. Also, from the May 13 peak, the transaction count started trailing lower, and by May 30, it sat at 1,065,407 transactions.

Unique addresses

The total unique addresses represent the count of distinct entities completing activities on the network. At the beginning of the month, there were 194,930,328 total distinct addresses. Characteristic of the historical behavior, the addition of new tokens was relatively uniform across most days of the month.

The highest number of total distinct addresses on Ethereum was logged on May 10 – 112,413. The lowest sum of 71,816 unique addresses had been recorded at the very beginning of the month.

The change in total distinct addresses in May was greater than April’s, given that there was a 1.3% spike in total addresses on the network. By May 31, the figure had reached 197,622,085 from 194,930,328 addresses on May 1, an increase by 2,691,757 addresses.

Daily active addresses

The count of daily active addresses on Ethereum moved in sync with the total daily transactions asserting that spikes had been marshaled by addresses that came onto the network. The total daily active addresses touched a peak on May 13, reaching 641,750, during which daily transactions were also the highest for the month. This consequently meant that the peak count this year moved from March 18 (639,040 active addresses) to the new date.

The least count of daily active addresses was logged on May 30, during which the daily active addresses declined to 418,023. This was a continuation of a trend towards the end of the month that saw the daily active addresses remain below 500,000 since May 19.

Average transaction fee (USD)

The average transaction fee on Ethereum is notoriously high, especially relative to competing blockchain platforms. While there have been various market-bending influences this May, one of the most significant influencing changes was the launch of Otherside NFTs.

This collection of NFTs launched on the weekend leading to the start of May, and the effect of such a hyped project was massive congestion on the Ethereum network. The effect? Abnormal fees charting all-time high numbers, most of which were burned anyway.

Throughout May, the average transaction fee on Ethereum was highest on the 1st, during which the Otherside NFTs’ launch blew the figure to $200.06, an all-time high. Afterward, the fees charted significantly lower, and the only other significant spike seen in May was around May 12. The $3.73 in transaction fees recorded on May 28 was the lowest for the month, 98.14% down from the monthly peak.

Average network hash rate

The average network hash rate of the Ethereum network has a history of recording month-over-month gains, and that trend continued in May. At the start of the month, the platform’s hash rate stood at1,082,118.5 GH/s. This metric peaked on May 13, during which the average daily hash rate stood at 1,126,674.3 GH/s.

The lowest hash rate of the blockchain was seen on May 7, when the network logged 1,060,736.6 GH/s in average computational power.

DeFi Performance

Market share

With the dismal performance of token markets, it was expected that the decentralized finance side of blockchains would equally suffer, and such has been the case across May. However, Ethereum ascertained its position as the most dominant DeFi platform, and market share performance is the metric to illustrate this.

In May, the Ethereum DeFi ecosystem saw a spike of nearly 10% in the market share, indicating an increase concurrent with the declines of competing blockchain ecosystems. The change emerged to defy a pattern of competing blockchains eating off Ethereum’s DeFi supremacy which was initially around 95% of the market at the start of 2021. On May 1, the market share of Ethereum was 55.72% and grew to touch 64.13% by May 30.

Second-placed BSC and third-placed Solana rank as the only other networks with a market rate of more than 5%. The two chains have shares of 8.04% and 5.42%, respectively.

Total Value Locked (TVL)

Despite the positive outlook in the market share of the largest smart contracts platform, its total value locked (TVL) fell across the month, 37%, to be specific. The peak TVL on Ethereum, seen on May 5, was $1113.3 billion, and the count struck its lowest when it reached $66.87 billion on May 28. MakerDAO, the organization behind the DAI stablecoin, with a 13.92% dominance on Ethereum, remained the leading protocol throughout the month.

At the end of May, decentralized exchange liquidity protocol for stablecoin trading, which led Ethereum protocols in the latter days of April, Curve Finance, sat fourth with an over -50% one-month change in TVL. Lido Finance and decentralized liquidity protocol AAVE ranked above it, with $8.01 billion and $7.8 billion in TVL.

To learn more about Ethereum visit our Investing in Ethereum guide.

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