13 Aug 2020 Simon Briggs
ETH Hashrate Reaches 20-Month High Amid DeFi Tokens Price Surge
Еthereum network`s hashrate, or the computing power of the network, reached a new high, surpassing the levels which Ethereum reached last year. Data from Etherscan shows that Ethereum’s network reached levels of over 201,000,000 GH/s. In 2019, the computing power of Ethereum peaked at about 200,000,000 GH/s.
Source: Etherscan
The hash rate record is a result of an increased demand for ETH, which dates back from mid-June this year. The reason for the increased demand is the relatively new DeFi sector, as the majority of the DeFi projects are based on the ETH network, and more and more users are utilizing DeFi platforms. In turn, this leads to clogging up the Ethereum`s network.
The result of the bottleneck on ETH network is increased transaction fees, which are currently around the all-time record high level, and are a result of spikes in transactions of DeFi assets. When looking at ETH transactions fees, there is a drastic rise from only $0,84 in January 2020, to exceeding the $3 mark, as of press time.
Crypto experts have mixed opinions about whether the increase of hashrates is good or bad for the Ethereum ecosystem. Nevertheless, the increase of hashrate means more Ethereum miners are joining the competition for transaction validations. Also, hashrate increases because of higher mining rewards, especially in times of network congestion, where miners put higher transaction fees for validating blocks.
Source: Glassnode
The higher transaction fees directly result in more profits for miners, especially when the DeFi sector is blooming. Higher miner revenues will attract more miners to join the race, which should push hashrate to even higher values. However, the current hashrate levels are still way below the mid-2018 record of 295,911.9974 GH/s, recorded on August 9, 2018.
The recent DeFi boom, however, managed to outpace Bitcoin in terms of transaction fees. Kraken-owned crypto data provider noted that: “on-chain transaction fees on Ethereum continue to outpace Bitcoin and the gap is now up to $1 million a day”. However, some crypto experts expressed concerns that higher fees may have a negative effect on users` experience and usage of Ethereum’s network.
Source: CoinMetrics
Meanwhile, the DeFi ecosystem marks another week of growth. Chainlink (LINK), for example, managed to hit another all-time high, reaching a price of $17.86. Chainlink also managed to surpass cryptocurrencies like Bitcoin Cash (BCH) and Bitcoin SV (BSV), based on market capitalization. The price explosion means LINK is up 64% over the past week, while the crypto leader, Bitcoin, slipped with 2 percent. Because of the DeFi boom, Bitcoin also managed to lose a part of its dominance, currently sitting at little over 60%.
Tezos (XTZ) also made a huge leap, hitting its all-time high of $4.48 on August 13, 2020. The upwards rally for the 11th largest cryptocurrency began on August 8 and is continuing to grow exponentially.
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