There are almost nine times as many daily active users in the Ethereum ecosystem today compared to four years ago, and analysts suggest that this increasing demand is set to propel Ether (ETH) to new heights. According to data compiled by crypto ETF issuer Bitwise, the average number of daily active users of Ethereum and its scaling solutions, including Arbitrum and Polygon, has surged from more than 250,000 in Q1 2020 to approximately 2.25 million in the first quarter of 2024.
Growth of Layer-2 Solutions
The lion’s share of early users came from the Ethereum layer-1 mainnet. However, as more transactions are pushed to layer-2 (L2) networks, Ethereum now comprises a smaller portion of active daily users. The introduction of L2 networks such as Optimism, Base, and zkSync has significantly contributed to this growth.
On June 4, the Ethereum mainnet recorded 378,000 active users. In contrast, Polygon had 1.3 million active users, while the other four L2s combined posted around 1.5 million active users. Optimism launched in late 2021, and both zkSync mainnet and Base became publicly accessible in 2023.
The current user numbers for Ethereum may appear modest, but they are part of a strategic roadmap. Ethereum co-founder Vitalik Buterin has focused on leveraging L2s as a means of scaling the main blockchain. He recently argued that L2s are similar to the sharding concept from the old Eth 2 plan, suggesting that these layers could help foster growth in various “subcultures” within the Ethereum ecosystem.
| Metric | Q1 2020 | Q1 2024 |
|---|---|---|
| Daily Active Users (DAU) | 250,000+ | 2.25 million |
| Ethereum Mainnet DAU | Predominant | 378,000 |
| Polygon DAU | N/A | 1.3 million |
| Combined L2s DAU | N/A | 1.5 million |
VanEck’s Bullish Outlook
Meanwhile, crypto ETF issuer VanEck has raised its price target for Ethereum, expecting the cryptocurrency to hit $22,000 by 2030. In a June 5 blog post, VanEck’s head of digital assets research, Matthew Sigel, and his colleagues, raised their 2030 expectations for Ether from $11,800 last year. They noted that Ethereum’s revenue per user exceeds most Web2 businesses and is set to grow in popularity among traditional financial market participants and Big Tech.
“We anticipate that spot Ether ETFs are nearing approval to trade on U.S. stock exchanges. This development would allow financial advisors and institutional investors to hold this unique asset […] and benefit from the pricing and liquidity advantages characteristic of ETFs,” the analysts stated. They project ETH’s 2030 valuation based on a forecast of $66 billion in free cash flows generated by Ethereum and accruing to the ETH token.
The Economic Power of Ethereum
Despite having lower user numbers, the Ethereum blockchain still generates three times more in fees than the top layer-2 networks and Solana combined. Ryan Sean Adams, co-founder of Bankless, referred to this as a “modern miracle.” The L2s pay Ethereum fees to settle transactions on the main chain and benefit from its security.
According to CoinGecko, Ether is currently priced at $3,862, reflecting a 1.3% increase over the last 24 hours. Many expect the launch of spot Ether ETFs to eventually push the price of Ether to a new all-time high. However, some caution that inflows into the new crypto ETFs may be significantly lower than those seen with Bitcoin ETFs.
As the Ethereum ecosystem evolves, its ability to scale and integrate with various subcultures and applications will be critical in maintaining its growth trajectory. The potential approval of spot Ether ETFs and the ongoing development of L2 solutions are expected to further bolster Ethereum’s position in the cryptocurrency market.
Featured image credit: Resiany Surya P via Vecteezy