DeFi is pushing the Ethereum network to unprecedented levels, as smart contract applications and users stress-test the world’s most in-demand decentralized computing protocol.
Contract calls on Ethereum have grown to never-before-seen volumes over the past few months, far outpacing levels seen in 2017 and now well above previous highs from summer 2019, according to data from on-chain analytics firm Glassnode.
The growth in calls to contracts from external addresses, a measure of all users interacting with Ethereum, combined with high gas prices and other metrics, show how DeFi and decentralized exchange have pushed the network to its limits.
Any transaction on the Ethereum blockchain other than a simple Eth send will interact with one or more smart contracts, commonly referred to as a contract call. Each transaction also requires a gas payment in order to work.
External contract calls are up more than 80% in 2020, reaching an all-time high of more than 900,000 calls in a single day on August 10. That figure is about three times higher than the average call volume of approximately 300,000 per day during the late-2017 to early-2018 period, when ETH prices hit a record high of $1,382.
DeFi protocols have grown into some of the largest gas consumers on the Ethereum network, a measure closely linked to contract call volumes. Protocols like decentralized exchange Uniswap and exchange aggregator 1inch consume hundreds of thousands in gas fees each day according to data from Eth Gas Station.
Some DeFi protocols are also exponentially increasing user numbers, as measured by Dune Analytics. For example, the number of unique users on decentralized exchange Uniswap increased by more than 75% in August, while DEX aggregator 1inch expanded its user base 35%.
Glassnode data also shows a surge in internal contract calls, a measure of the complexity of decentralized applications running on Ethereum. As decentralized application development advances, smart contracts are assigned increasingly complex tasks, like collecting liquidity for a token swap across multiple exchange platforms to get the best possible price.
That number of internal contract calls increased by more than 240% since the beginning of June, likely fueled by the proliferating menu of Yearn Finance clones and food-themed yield farming projects like Yam Finance and SUSHI.
On one hand, the growing use and complexity of smart contracts on the Ethereum blockchain is an encouraging sign of the health of the ecosystem. On the other, the associated high gas fees are pricing some users out of the market and may embolden the burgeoning Ethereum competitors.
If Eth 2.0, a scalable version of the Ethereum blockchain, can arrive in time, development on the platform could be supercharged with loads of new bandwidth to accommodate growth in both users and contract complexity.