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DeFi Gas Consumption Drops to 8-16%: NFTs Take Over as Top Contributor, Says Glassnode Report

A recent report from Glassnode has revealed that the percentage of gas consumed by DeFi protocols has significantly dropped from 34% in 2020 to between 8% and 16% presently. This significant drop is attributed to the increased popularity of nonfungible tokens (NFTs), which now command the maximum share of 25–30%.

DeFi protocols, or decentralized finance protocols, are blockchain-based financial systems that aim to provide financial services without intermediaries. Gas fees are the transaction fees paid by users to execute transactions on the Ethereum network, which is the most popular blockchain network for DeFi protocols.

The report from Glassnode indicates that the rise of NFTs has caused a shift in the usage of gas on the Ethereum network. NFTs are unique digital assets that are stored on the blockchain and can be bought and sold like traditional assets. The popularity of NFTs has surged in recent months, with high-profile sales such as Beeple’s digital artwork selling for a record-breaking $69 million.

The report also highlights that the growth of DeFi protocols has slowed down in recent months, with the total value locked (TVL) in DeFi protocols dropping from a high of $86 billion in May 2021 to $54 billion in August 2021. This drop in TVL is attributed to the increased competition in the DeFi space and the high gas fees associated with using DeFi protocols.

Despite the drop in TVL, the report notes that the number of unique Ethereum addresses interacting with DeFi protocols has continued to grow, indicating that the DeFi space is still attracting new users. The report also suggests that the DeFi space is becoming more mature, with a focus on building sustainable business models rather than chasing short-term gains.

Overall, the report from Glassnode provides valuable insights into the current state of the Ethereum network and the DeFi space. It highlights the impact of NFTs on gas usage and the challenges facing the DeFi space. Despite these challenges, the report suggests that the DeFi space is still growing and evolving, with new use cases and business models emerging.

Martin Reid

Martin Reid

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