Smart Contracts Now Accumulate Nearly 25% of Ethereum’s Total Supply

News / 14.06.2021

According to insights by the ETHhub founder Anthony Sassano, smart contracts account for Ethereum worth $63 billion. The value follows up on the Decentralized Autonomous Organization (DAO) event, which took place in 2016 and had Ethereum worth $230 million.

Ideally, smart contracts are a pioneering technology residing on a blockchain that enables parties to make agreements through a code. Unfortunately, data also shows that huge chunks of ETH withdrawals make their way into DeFi applications and smart contracts, leaving exchanges with a decreased supply of 12.0%. 

However, the DAO funds generated were compromised due to technical hitches in its code, leading to the hard fork of Ethereum’s blockchain to produce Ethereum Classic, which would recover the stolen funds.

More ETH in Staking Ventures

Asides from smart contracts, the ETH2 network also includes a considerable amount of Ethereum. ETH2 allows users to become validators and participate in maintaining the network’s overall security. In return, validators receive rewards for their efforts in ensuring a scalable and sustainable ecosystem. 

The current number of staked ETH in this network is 5,435,744, with an APR of 6.7%. Thus, using Ethereum’s price today equates to approximately $13.56 billion used in the staking network. This figure represents 4.7% of the cryptocurrency’s overall supply locked in DeFi smart contracts through the ETH2 staking platform. 

As more users join the PoS system, the number of validators may equally increase, giving rise to more locked ETH. Leveraging a PoS consensus mechanism may significantly contribute to a growing interest in staking on ETH2 since it employs environmentally-friendly solutions compared to PoW mechanisms.

Lower Risks for ETH Investors

On June 4, 2021, Opium Network introduced an innovative product known as the Opium ETH Dump Protection. The synthetic derivatives platform introduced this feature as decentralized insurance to counter any possible losses on a digital asset. 

Bearish investors who believe that the price of ETH will plunge instead of growing can buy ETH Dump Protection and acquire payouts once the asset’s value decreases. Traders purchase this premium protection product and hedge against losses to receive the difference between the strike price and Ethereum’s latest value. 

The new solution also comes with the support of a liquidity pool whereby users can stake their stablecoins and receive the specific asset within a week. Usually, it would be easier to buy the digital asset instantly from exchanges without waiting for a week. Nonetheless, Opium implements this procedure since stablecoins safeguard a trader’s investment capital on the underlying asset, which in this case is Ethereum. 

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Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, he covers trendy issues on digital currencies.