Number address Ethereum with a non-zero balance reached a new record of 92.5 million. The bear market of 2022, which culminated in the collapse of one of the former largest cryptocurrency exchanges in November, does not seem to have affected the growth of addresses with non-zero balances.
Some analysts look at the number of addresses Ethereum which have a non-zero balance as a proxy for wider “acceptance” the second largest cryptocurrency by market capitalization. Seen through this lens, the steady, seemingly unstoppable growth in the number of non-zero balance Ethereum addresses can be interpreted as a long-term bullish sign for the ETH cryptocurrency.
100 million non-zero address wallets in Q2?
Over the past three years, Ethereum has added about 20 million non-zero balance addresses per year. Thus, preliminary calculations show that with only around 7.5 million addresses, the 100 million address mark is likely to be reached sometime in the second quarter of 2023.
This will definitely be big news. Cryptocurrency markets are notoriously fickle when it comes to responding to market narratives. Traders shouldn’t be too surprised to see that ETH received a boost on the eve of/immediately after hitting the 100 million non-zero address mark amid the hype and positive press this achievement is likely to attract.
Other indicators also indicate continued significant growth of the network
The growth in the number of non-zero Ethereum balances is seen by some as too crude a metric — every new non-zero address does not necessarily mean a new Ethereum user. Fortunately for Ethereum bulls, there is a long list of other indicators that also point to significant further growth for the network.
According to a recently published report by blockchain software development company Alchemy, the number of smart contracts deployed on the Ethereum mainnet will grow by a staggering 300% in 2022. This means that smart contract deployment growth is roughly in line with the growth rate seen in 2021, despite a bearish 2022. market. By the end of the fourth quarter of 2022, 4.6 million smart contracts had been deployed on the Ethereum blockchain, the report noted.
“The Web3 community has proven to be extremely resilient,” commented Jason Shah, Head of Development at Alchemy. “This report shows that they are more focused and motivated than ever to build the future of this ecosystem, while honestly acknowledging the unnecessary failures we saw in 2022,” he added.
Elsewhere, the number of validators on the Ethereum network recently surpassed 500,000. It was only last July that it surpassed 400,000. A network validator is a computer that runs software that verifies and validates transactions on the blockchain. A larger number of validators is considered a sign of network strength, as it means that it will be more difficult for a malicious group of validators to gain control of the network and damage the blockchain.
Ethereum deflation is another narrative that will gain traction in 2023
The bear market in cryptocurrency markets that began just over a year ago means that the fall in the price of Ethereum (ETH is down about 67.5% from its all-time highs recorded in November 2021) has been the dominant story in recent quarters.
But in September 2022, a key change was made to the Ethereum protocol that is likely to give the cryptocurrency a major long-term boost. Last September, Ethereum switched from using a proof-of-work consensus mechanism to a much less energy-intensive consensus mechanism share confirmation .
Not only does this reduce concerns about the cryptocurrency’s environmental impact, which could help it attract institutional capital flows in the coming years when much more energy-intensive rival Ethereum bitcoin may be struggling, but Ethereum’s inflation rate has also plummeted.
Indeed, as of Sunday, January 15, the annual emission rate Ethereum was about 0.55%, while the burning rate was slightly less than 1.2%. As a result, Ethereum is currently experiencing deflation at a rate of around 0.65% per year. When Ethereum was still a proof-of-work blockchain, its inflation rate was 4-5%.
Some analysts have argued that the deflationary impact of the merger may have been what helped prevent ETH from falling below $1,000 and hitting new yearly lows in the immediate aftermath of the FTX crash. In contrast, bitcoin hit new yearly lows since the FTX fiasco.
Ethereum is about to undergo its next major update. ” Shanghai » hard fork is expected in March and will allow the withdrawal of staked ETH for the first time, a change that is being touted as a big positive for the protocol as it will likely encourage more investors to stake ETH.
