ETH Fundamentals Improve Despite Correction
As prices retrace across the board in crypto, it is helpful to analyze fundamentals and assess to what extent have prices and fundamentals changed. Leveraging key on-chain indicators from IntoTheBlock, it is evident that Ethereum’s demand and store of value proposition continue to grow, unaffected by the recent price volatility. Ethereum’s fees have been notoriously…
By: Lucas Outumuro
DeFi NewsAs prices retrace across the board in crypto, it is helpful to analyze fundamentals and assess to what extent have prices and fundamentals changed. Leveraging key on-chain indicators from IntoTheBlock, it is evident that Ethereum’s demand and store of value proposition continue to grow, unaffected by the recent price volatility.
Ethereum’s fees have been notoriously high in 2021. As demand for Ether and Ethereum-based applications skyrockets, their usability has dwindled — at least for retail users.
Throughout the last 4 weeks, average gas costs have sustained well above 100 gwei, even during the weekends. This translates to over $30 in gas fees to swap one token for another in Uniswap.

As of March 24, 2021 using IntoTheBlock’s DeFi Network Insights
The high associated fees have priced out users looking to transfer small amounts, especially for more complex, gas-consuming transactions such as borrowing or staking. These issues, though, are expected to be substantially reduced in the near future as more protocols integrate layer 2 technologies, as Uniswap recently announced.
While detrimental to some users, the high fees also showcase the value being generated by Ethereum. Specifically, the willingness to pay for blockspace highlights the demand to use Ethereum and decentralized applications built on top of it.
Zooming out, we observe the aggregate amount spent in fees on Ethereum has grown by an order of magnitude greater than its price.

As of March 24, 2021 using IntoTheBlock’s DeFi Network Insights
Since January 2020, annualized fees in Ethereum have grown from $20 million to over $8 billion, representing a 400x increase. At the same time, Ether has appreciated a still-remarkable 13x from $130 to $1,600.
Asides from its growing utility, Ether’s narrative as a store of value continues to propagate. Though hard to quantify, one indicator that reflects this is the number of long-term holders.
IntoTheBlock classifies as hodlers all addresses that have been holding an asset for a weighted average time of at least one year. Growing long-term investors suggest the belief that an asset will retain or increase its value over time, which is a key characteristic of store of value assets.

As of March 24, 2021 using IntoTheBlock’s Ethereum ownership indicators
In Ether’s case, the number of hodlers has increased consistently over time regardless of price volatility, managing to even increase throughout the price plunge in March 2020. This relentless hodling propels Ether’s potential to become a recognized store of value asset, just as Bitcoin has managed to convince more investors of its store of value capabilities.
Additionally, EIP-1559 ties Ethereum’s growing utility to its store of value proposition: by burning transaction fees Ether’s supply would be inversely proportional to its transaction volume. By potentially reducing ETH supply and leading to lower, more predictable gas fees, EIP-1559 is expected to further improve Ethereum’s fundamentals.
Overall, Ethereum has recorded remarkable growth in key demand indicators such as fees. While short-term price volatility may scare off some, hodlers remain unaffected and demonstrate Ethereum’s emerging store of value narrative.