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Grayscale Ethereum Trust Ends Outflows as Ethereum Layer 2 Activity Surges
The Grayscale Ethereum Trust (ETHE) saw its first day without net outflows on August 12, 2024, following its conversion to a spot ETF on July 23. This event coincided with a notable increase in on-chain activity across the Ethereum ecosystem, suggesting a potential shift for the struggling fund.
Since its inception, ETHE has faced considerable challenges, losing nearly $2.3 billion in Ether — over 25% of its original $9 billion in holdings. In contrast, Grayscale’s Bitcoin Trust (GBTC) took almost four months to reach a similar milestone without outflows.
The halt in ETHE outflows aligns with a marked rise in activity on the Ethereum network and its layer 2 solutions, indicating a possible resurgence of investor confidence in the Ethereum ecosystem.
Ethereum DEXs Surge with Layer 2 Growth
Data from DefiLlama indicates a positive trend in decentralized exchange (DEX) trading volumes on Ethereum and its layer 2 networks, such as Base. Over the past 24 hours, these networks have seen an increase of 12% and 11% respectively. In contrast, trading volumes on Solana-based DEXs have experienced a 10% decline during the same period.
The growth extends beyond DEXes. Uniswap, a leading Ethereum-based DEX, saw a record number of new monthly addresses created on layer-2 networks in July. Dune Analytics data reveals a staggering 8.65 million new addresses, nearly double the 4.93 million added in June.
This trend extends further, with layer 2 solutions attracting significant user bases. Leon Waidmann, a crypto analyst, highlighted this in an August 9 post, stating that Base and Arbitrum boast 2.64 million and 1.37 million weekly active users, respectively.
Looking at network activity, L2Beat data reveals that 73 Ethereum layer 2 solutions collectively processed 298 transactions per second (TPS) on August 12th. This figure sits at just 34 TPS, shy of the all-time high of 332 TPS, which was reached on July 18.
The total value locked (TVL) across all Ethereum layer 2 solutions currently stands at $37.7 billion, showcasing their growing importance within the DeFi landscape. Ethereum’s mainnet still holds the larger share, with a TVL of $85 billion.
A Bullish Signal for Ether Price?
Several analysts view the slowdown in ETHE outflows as a potential catalyst for Ether price in the coming months. They posit that ETH’s price trajectory may mirror that of Bitcoin following the approval of its spot ETFs, which also witnessed initial outflows from GBTC.
While the early days of ETHE have been turbulent, the recent surge in Ethereum network activity offers a glimmer of hope. Whether this translates into long-term price appreciation for Ether remains to be seen, but the renewed investor interest is undeniable.
Grayscale Ethereum Trust Ends Outflows as Ethereum Layer 2 Activity Surges
