Research Summary
The report discusses the impact of deflation and the Dencun upgrade on Ethereum (ETH), the surge in Solana activity, and the rise of memecoins. It also provides insights into how to capitalize on these trends, upcoming key events, and on-chain analysis.
Key Takeaways
Ethereum’s Deflationary Trend
- ETH Supply Becomes Deflationary: Since the merge, 1.4 million ETH has been burnt, making the ETH supply deflationary. The deflation rate has reached an annualized rate of 1.095% over the past seven days.
- ETH’s Growing Total Value Locked (TVL): Despite high Ethereum fees, on-chain metrics have rallied. Ethereum’s TVL grew the second most in percent terms out of major chains over the past month, surpassed only by Bitcoin.
Dencun Upgrade and Its Impact
- Dencun Upgrade to Reduce L2 Transaction Fees: The Dencun upgrade, which implements protodanksharding, is scheduled to go live on March 13th. This upgrade promises to reduce L2 transaction fees, potentially making the Ethereum ecosystem more useful for retail users.
Memecoin Season and Market Implications
- Surge in Memecoin Trading: Following Bitcoin’s explosive trading, traders have turned their attention to memecoins. The report suggests that tokens with no utility pumping could indicate a frothy, unsustainable market.
Solana’s Activity Rebound
- Solana’s Trading Volume Surges: DEX trading on Solana more than doubled this week, breaking its all-time high from December and surpassing Ethereum mainnet on several days. This could reignite the Solana narrative.
Stablecoin Supply Increase on Base
- Stablecoin Supply Rallies on Base: The quantity of stablecoins on Base, Coinbase’s L2, jumped by 18% this week. Given Coinbase’s massive userbase, Base is an upstart chain to watch.
Actionable Insights
- Monitor Ethereum’s Deflationary Trend: Keep an eye on Ethereum’s deflation rate and TVL growth. These metrics could influence Ethereum’s market position and value.
- Assess Impact of Dencun Upgrade: Evaluate the effects of the Dencun upgrade on L2 transaction fees and Ethereum’s usability for retail users.
- Stay Alert to Memecoin Market Dynamics: Monitor the memecoin market for signs of volatility or unsustainable growth. Develop an exit strategy and stay level-headed in the face of potential big wins.
- Track Solana’s Trading Activity: Keep an eye on Solana’s trading volume and narrative, especially in comparison to Ethereum.
- Watch Stablecoin Supply on Base: Monitor the growth of stablecoin supply on Base, as it could indicate a potential shift in on-chain activity.
