JPMorgan Finds Ethereum’s Network Activity Remains Stagnant Despite Recent Upgrades

JPMorgan Report: Ethereum’s Upgrades Haven’t Meaningfully Increased Network Usage Despite Institutional Interest

Ethereum’s recent network upgrades have not led to a significant rise in transaction activity or active user addresses, according to a new analysis from JPMorgan.

The report, authored by Nikolaos Panigirtzoglou and colleagues, states that despite improvements such as the March 2024 Dencun upgrade and the early May Pectra update, core metrics like daily transactions and wallet activity have remained largely flat.

However, JPMorgan noted a modest uptick in total value locked (TVL) during this period, which is likely driven by increased lending and borrowing activity on decentralized exchanges. This growth in TVL, however, trails the appreciation of Ethereum’s native token, ETH, in dollar terms.

The Pectra upgrade, activated on May 7, was designed to enhance staking efficiency, improve wallet features, and boost overall network performance. These enhancements are expected to make Ethereum more attractive to institutional investors and differentiate it from competing blockchains. Nevertheless, these technical advances have not yet translated into greater on-chain activity.

Following the Dencun upgrade, network fees declined, partly due to a shift in usage towards layer 2 scaling solutions. Additionally, Ethereum’s circulating supply rose, raising concerns about inflation risks in light of the subdued transaction volume.

JPMorgan’s report also points to futures market data showing significant institutional involvement in Ethereum’s recent price rally, which has climbed over 45% in the last month, according to CoinDesk.