Ethereum

This Network Had as Many Users as Ethereum in 2023: Flipside Data

Polygon, a layer-2 scaling network, nearly matched Ethereum’s user base in 2023, as reported by blockchain analytics firm Flipside.

Polygon acquired 15.24 million users that year, coming close to Ethereum’s 15.4 million, with a difference of around 160,000 wallets.

Polygon Topped User Acquisition in First Half of 2023

Flipside defines an “acquired” user as someone who engaged in at least two transactions on a specific blockchain, with at least one occurring in 2023. During the first half of 2023, Polygon led the user acquisition race but was later surpassed by Ethereum, maintaining its lead throughout the latter part of the year.

Is the bull is really here? How can we tell?

Data.

Sentiment isn’t the only thing that’s changed lately. According to the data, user behavior is shifting — and with it, crypto markets.

We cover it all in The Onchain Crypto User Report 🧵📊👇 pic.twitter.com/IsclNOZhJk

— Flipside 📊 (@flipsidecrypto) January 25, 2024

In January, Polygon achieved a remarkable milestone with 2.8 million acquired users, constituting over 40% of the total number for 2023, according to Flipside. Ethereum secured the lead for the entire year, while Bitcoin claimed the third position with 10.65 million acquired users. Solana and Arbitrum completed the top five rankings.

The aggregated data from the eight tracked blockchains, including Optimism (OP), Avalanche (AVAX), and Base (BASE), revealed a total of 62 million acquired users. Flipside observed that user acquisition peaked in May but gradually declined afterward.

Notably, Flipside suggested a connection between the surge in acquired users starting in March and the collapse of Silicon Valley Bank. The event potentially eroded confidence in centralized entities, prompting a shift towards decentralized custody alternatives.

Base, launched in August, also exhibited a strong start, but its user volume dwindled in the final months of 2023. Flipside speculated that the waning user growth for Base might be attributed to renewed enthusiasm for more established chains towards the end of the year.

Flipside Predicts Trends for 2024

In its predictions for future trends, Flipside observed a decline in NFT-related activities and a shift towards decentralized finance (DeFi) activities during 2023. Anticipating the upcoming cycle, Flipside suggested that DeFi activities would continue to dominate, surpassing the prominence of NFT trading.

Specifically, it highlighted decentralized exchange (DEX) trading and yield farming as ongoing predominant applications while also forecasting the emergence of new DeFi applications like the Ethereum restaking protocol Eigenlayer.

According to Flipside, user behavior in 2024 is expected to involve increased interaction with multiple blockchain networks, although most users will likely stick to engaging with a single chain.

The prediction further emphasized a growing trend of user interaction with Layer 2 networks in the coming year.

Despite being a minority in 2023, users with more than one blockchain predominantly interacted with Layer 2s. Flipside speculated that rising transaction fees during the next crypto market bull run could lead Layer 2 networks to lower their costs for end users competitively, potentially driving increased interest in associated governance tokens.

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Ethereum

Ethereum Derivatives Traders Position for $4K Rebound, Data Shows

Ethereum ( ETH) derivatives traders are back in full swing, with open interest, volume, and options activity all flashing signs of renewed energy across futures and options markets. ETH Max Pain Sits Near $3,300 as Traders Eye Key Expiry Levels At 10 a.m. Eastern time on Nov…
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Ethereum

ETH2 Beacon Deposit Contract Now Controls 60% Of All Ethereum: Arkham

Rain Lohmus bought $75,000 worth of ETH in 2014, which is now worth $871 million. Yet, he cannot move even a single coin.

New on-chain research from Arkham Intelligence this week shows that the wallet address holding the most ETH today is not an individual, not an exchange, not an ETF issuer, but the staking contract that secures Ethereum.

According to Arkham, the ETH2 Beacon Deposit Contract currently holds more than 72.4 million ETH, worth around $252 billion at current market prices, and represents approximately 60% of the total supply.

Ethereum’s Power Center

In terms of individuals, the research firm confirmed that the largest known individual holder of ETH is still Rain Lohmus, the founder of Estonian bank LHV, who bought 250,000 ETH in the 2014 presale for around $75,000. Those coins would now be worth roughly $871 million, but Lohmus does not have access to them because he lost the private keys years ago.

The second largest identifiable individual holder is Ethereum co-founder Vitalik Buterin, who currently holds around 240,000 ETH, worth around $840 million.

Beyond individual wallets, centralized exchanges and institutional entities collectively control some of the largest pools of Ether. Binance, for one, holds approximately 4.09 million ETH, while asset manager BlackRock holds around 3.94 million ETH, largely associated with its iShares Ethereum Trust ETF. Coinbase is the next largest institutional holder, with approximately 3.5 million ETH across multiple addresses, including cold wallets and staking reserves for its cbETH staking token.

Following suit are Upbit, Robinhood, Kraken, OKX, and Bitfinex, which appear among the top institutional holders.

Seized Funds, Stolen Funds, and Layer-2 Bridges

Arkham found that governments also appear on the leaderboard. For instance, the United States government controls around 60,000 ETH, which largely consists of seized criminal funds, including from the Potapenko/Turogin case and from seizures related to the Bitfinex hacker.

Ethereum

Ethereum Traders Just Flipped Bullish, But History Says This Is a Major Red Flag

Ethereum’s bounce toward $3,500 triggered instant FOMO, but Santiment says extreme optimism usually means price is about to disappoint.

Ethereum traders have swung sharply from extreme bearishness to extreme bullishness within just a few days, based on social media sentiment.

But fresh data suggest that when ETH nearly rebounded to $3,500 on Thursday, the crowd interpreted the move as a confirmation that the asset was “back in business.”

ETH Trader FOMO

Santiment warned that this sudden pivot is similar to the same pattern seen earlier in the week, when retail panic selling actually contributed to the rebound. Now, the rapid return of FOMO could similarly stall further upside.

According to the analytics platform, prices have shown a tendency to move in the opposite direction of the crowd, and that more neutral sentiment phases have proven to be stronger buy signal environments than euphoric ones.

Crypto trader Ted Pillows also noted that even though the altcoin is showing some rebound after this week’s sharp decline, the recovery lacks conviction. According to Pillows, the current move higher, though modest, is being driven largely by short positions being closed rather than new spot buyers stepping in. He added that Ethereum needs to reclaim the $3,600-$3,700 price range with meaningful inflows to establish strength and dismiss the risk of further downside. Without that confirmation, Pillows believes the odds still favor lower prices from here.

Despite the near-term uncertainty, some traders say the bigger picture is still pointing toward a substantial upside scenario. For instance, crypto trader “Trader Tradigrade” said that ETH’s monthly chart is currently developing what he describes as a massive Inverse Head and Shoulders pattern, with a potential price target of $14,000 once confirmed.

“Wet Blanket” Phase

As the crypto market remains sluggish, Galaxy CEO Mike Novogratz believes that this could be due to long-term holders rebalancing their net worths and diversifying away from massive concentrated holdings after a very long bull market. Novogratz deems this to be a healthy sign in the medium and long term as these positions get distributed. In the short run, however, he said that “it’s a proverbial wet blanket” and has weighed on prices.

About the author

Chayanika has been working as a financial journalist for six years. A graduate in Political Science and Journalism, her interest lies in regulatory implications with a focus on technological evolution in the crypto realm.