Ethereum adoption depends on these 2 pillars but future growth is still uncertain: Report

Coinshares report that the role of Ethereum (ETH) in crypto is being shaped by two main pillars: marketplaces and stablecoins.

However, while the network is making waves in these areas, the path forward for new applications is unclear.

Decentralized exchanges dominate.

The report, released on September 24, indicated that marketplaces and stablecoins accounted for more than half of Ethereum's current use cases. Decentralized finance (DeFi) protocols and the growing stablecoin market are key drivers of the trend, with Ethereum's role as the backbone infrastructure for many crypto projects.

According to the study, marketplaces such as Decentralized Exchanges (DEXs) and Fungible Tokens (NFT) platforms have positioned the network as a gateway to blockchain for tokenized assets.

Uniswap alone accounted for at least 15% of transaction fees on Ethereum in the first half of 2024. The OpenSea NFT marketplace has also been identified as a key contributor to blockchain payments, although its importance has waned significantly since its peak. 572 million USD in H1 2022.

The study also found that more than $135 billion worth of stablecoins are circulating on Ethereum, including two by market capitalization, Tether (USDT) and USD Coin (USDC).

These digital assets secure their currencies based on the blockchain framework, adding liquidity to DeFi platforms and making cross-border payments seamless.

Ethereum has struggled to find sustainable use cases.

Despite these positives, the Coinshares report raises an important question: What comes next?

Analysts believe that the network's recent improvements, the move to Proof-of-Stake (PoS) and the continued development of Layer 2 (L2) scaling solutions have positioned it well for future growth. Still, future innovations remain speculative, and demand for new decentralized applications (dApps) is uncertain.

CoinShares suggests that Ethereum's future success may depend on its ability to overcome its current use cases. The network's potential for enterprise adoption, gaming, and meta-adverse innovations are there, but real-world demand and implementation are key. Ethereum needs to attract developers to push the boundaries of what blockchain technology can offer in everyday life.

In a summary of the findings posted on X, James Butterfield, head of research at crypto asset manager, said that the price of ETH is primarily driven by the “demand for Ethereum transactions,” or how many users are willing to provide services on the service. Network rather than factors such as product collection.

The report added that the majority of transaction fees on the network originate from a “very small set of services” that mostly involve speculation or simple transfers of value. As such, Butterfill proposes that the network should focus on creating “sustainable on-chain utility” to maintain its long-term value.