Introduction

2023 has been a big year for Ethereum and crypto in general. There has been a lot of focus on regulation and macro conditions, but what about the high-level trends we have seen on Ethereum?

In light of regulation, operation chokepoint, hacks, FUD, and many other obstacles, Ethereum keeps chugging along and many key trends are forming on-chain. At the time of writing this, Ripple won its court case, removing some uncertainty around what is considered a security. Note that this is a controversial decision that the SEC may appeal, and decisions from lower courts can get overturned on appeal. Nevertheless, it can be seen as a win amid wider turmoil in the industry. All of this is in the backdrop of the Bitcoin halvening, which is less than a year away.

What to Expect?

Given this report focuses on Ethereum, we will highlight some high-level trends such as the following:

• ETH Balance Trends Over 2023
• Top Entities By Gas Consumption

To get a top-down view of overall user activity, we will look at the following:

• Active Wallets
• Timezone Trends

ETH Balance Trends

It has been a significant 12 months for the Ethereum ecosystem - a successful merge to PoS, rollups continuing to scale, price action, and much more. To get a good sense of what is happening, it's good to check where native ETH is being held.

Growth of ETH Balances in 2023

The chart below looks at the percent change in ETH balances from January 1st, 2023 to the time of writing, July 11th, 2023. We highlight percent change instead of total ETH balance to highlight growth in particular categories.

There are a few sectors that have seen positive and negative growth over 2023.

Growing Sectors

The growing sectors include ETH Staking, Bridges, and DEXs. Over 24.4m ETH have been staked as of July 20th. More importantly, there was a different kind of flippening this year - ETH Staked vs ETH on Centralized Exchanges.

The trend is clear, ETH is moving off exchanges and being staked on-chain. Notably, since November 7th, 2022, there was roughly a 31.3% decrease in ETH balances on exchanges with this trend accelerating after the merge. Next up in the growing sectors are bridges.

Bridges include layer-2s and alternative layer-1 bridging solutions (most of the top bridge contracts are for layer-2s). This falls in line with the narrative of layer-2s gaining in popularity amongst Ethereum users. In particular, most of the largest bridges are the likes of Arbitrum, zkSync, Polygon, Optimism, and other Ethereum scaling solutions.

Finally, DEXs are the 3rd sector to grow but it has been in a clear decline since the end of March 2023. It is up just 6% in ETH holdings at the time of writing. Of course, DEXs may use WETH behind the hood and that will be accounted for in our WETH balances (more on this below).

Declining Sectors

The other four sectors have been in a period of decline in 2023, which include DAOs, WETH, CEX, and Funds. The Year to Date (YTD) declines are the following:

• DAOs: -6.1%
• WETH: -10.6%
• CEX: -21%
• Funds: -13.6%

CEXs have been hit the hardest, followed by Funds, WETH usage, and DAO balances.

Moving away from ETH balances, we want to spot useful applications on Ethereum and a good way of doing that is through gas consumption.

Top Entities By Gas Consumption

Although there may be unoptimized contracts that may spike gas on a given day, a longer time frame can highlight key themes of important contracts. Our labeling will be used to show the higher-level entities behind these contracts to get a sense of the ‘Top 20 Entities in 2023’.

Unpacking the top 20 entities, we can see a few dominant categories. All of the above entities can be grouped into the following categories:

Exchanges/Aggregators (30% of the top entities)

• Uniswap
• 1inch
• 0x
• Curve.fi
• KyberSwap
• Coinbase

DeFi (20% of the top entities)

• WETH
• MEV
• Metamask
• Aave

NFT Dapps (15% of the top entities)

• Blur
• OpenSea
• Manifold

Stablecoins (10% of the top entities)

• USDC
• Tether

Layer-2s/Bridging (10% of the top entities)

• zkSync
• Stargate

Wintermute, Xen crypto, and Cointools (15% of top entities) are also on there but don't quite fit into the above categories. DEXs and aggregators are the most popular category, followed by DeFi apps or DeFi adjacent entities (MEV or WETH), followed by NFT dApps, and finally stablecoins and layer-2s/scaling. For the most up to date gas consumer entities, head to the Ethereum Gas tracker.