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Ethereum: a hedge above the rest

Ethereum
  • The use of Ethereum as a hedge is on the rise
  • ETH is arguably the most important cryptocurrency in new DeFi protocols
  • Contact call activity on ETH blockchain has substantial growth

The opportunity to use Ethereum as an investment vehicle is on the rise with the advancements in the development of Decentralized Finance protocols. Per data collected by industry data and intelligence provider, Glassnode, use of Ethereum as a hedge is up 30 percent compared to last year.

In other words, the use of ETH is moving from a simple store of value to many other functions. This is visible from the substantial supply of this coin in various smart contracts.

In recent times, ETH has become a synonym for the growth of DeFi, particularly due to considerable use as a part of new protocols. Many investors see it as more than just a passive investment opportunity.

Ethereum locked smartly

Ethereum might be the second-largest crypto behind BTC, but increasing numbers of investors are locking it in various types of smart contracts. This gives the opportunity to generate profits, especially in periods of lower volatility on the coin.

Glassnode reports that the fraction of ETH locked in smart contracts grew from 11.5 percent last year to 15 percent at the time of writing. More than 5 percent of the overall supply is in the Wrapped Ether (WETH) smart contracts.

Ethereum supply in smart contracts
Image source Glassnode

At the same time, the general use of Ethereum as a store of value is also on the rise. This is apparent from the growing number of exchanges that offer multi-sig smart contracts to their customers.

Contract calls are on the rise

Another indicator of ETH being used as a hedge is the surge in external contract calls. Outside of the simple ETH transactions, transmissions on the blockchain interact with smart contracts. This activity is usually called a contract call.

Apparently, this activity has grown by 80 percent this year. And setting a record high of more than 900,000 contract calls during a single day last month. The volume which is a triple of daily average in previous times.

This data shows that Ethereum has a very strong tendency to move beyond use as a store of value, and accelerating use as a hedge.

Gorica Gligorijevic

Gorica Gligorijevic

Gorica is a Serbian journalist with more than a decade of experience in print, web, TV, radio journalism, and the publishing industry. Past several years dedicated to web journalism and cryptocurrencies trading and investing.

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