DAI Is Losing Ground In The Ethereum Ecosystem

DAI Is Losing Ground In The Ethereum Ecosystem


Being the native stablecoin of the Ethereum blockchain is a severe burden to bear. For DAI, it seems the ongoing growth is coming to an end. Both the number of active addresses and transaction count are on a steep decline lately. 

What Is Going On With DAI?

It has been an impressive second half to 2020 for DAI, the “native stablecoin” of Ethereum. Thanks to the rising popularity of decentralized finance, this asset has received some much-needed attention. All good things must eventually come to an end, either temporarily or permanently. Which of the two labels will apply as of right now remains unclear. 

According to various statistics, the overall use of DAI is on a steep decline as of late. So much so that there is a genuine dropoff in the number of active addresses. The count is still more than respectable at the current rate, as nearly 10,000 active addresses are far from terrible. Other assets may give an arm and a leg to achieve this level of attention. 

BlocDesk DAI Active Addresses
Source: Glassnode

That said, it appears DAI has peaked in this department a little while ago. Since hitting over 13,100 active addresses four weeks ago, the decline has become more outspoken. While one may think there is a temporary decline going on, it seems the trend becomes more outspoken as time progresses. For onlookers, this may create a very unusual situation that may require some explanation.

One has to keep in mind DAI still has a market cap of over $1.68 billion. A year ago, the market valuation was $107.6 million. Sustaining such growth is virtually impossible in the long run and will often result in the trend falling apart ever so slightly. Most of the trading volume comes from Uniswap and Sushiswap, as both have a DAI/EH trading market. 

Transfer Court is Dropping Hard

The overall usability of an asset is determined by the number of transactions happening on the network. For DAi, this figure is also dropping quickly. A near 50% decrease in transactions is visible on the chart below, confirming interest in the stablecoin is waning a bit. Again, this is not too surprising after the growth curve of the past year. 

BlocDesk DAI Transfers
Source: Glassnode

It makes one wonder why DAI noted nearly 43,000 transactions in early January 2021 and can now only produce 21,279 transfers. Nothing has changed for the asset, as it is a stablecoin tied to a value of $1 at all times. Nor is the appeal diminishing, as it can still serve a purpose for trading and DeFi solutions. 

With all of the above information in mind, this year may prove very exciting for DAi and the broader Ethereum ecosystem. A lot is happening behind the scenes, including the ongoing Ethereum 2.0 upgrade. Depending on how that upgrade process goes, the overall appeal of this ecosystem may increase exponentially. 

AO/X Staff
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