In the second quarter, will Ethereum have 100 million non-zero address wallets?

On Monday, there were 92.5 million Ethereum addresses with positive balances, a new record high. The collapse of one of the former biggest cryptocurrency exchanges in the world in November 2022’s bear market does not seem to have had an effect on the rise in non-zero balance addresses. According to some observers, the proportion of Ethereum addresses with a balance greater than zero serves as a proxy for the wider “adoption” of the second-largest cryptocurrency by market value. In light of that, the ongoing, seemingly unbaiting rise in the number of Ethereum addresses with positive balances can be seen as a long-term bullish indicator for the ETH cryptocurrency.

Every year for the preceding three years, Ethereum has accumulated over 20 million addresses with a balance greater than zero. Thus, according to the fag packet calculation, the 100 million address milestone would most likely be reached in Q2 2023 with just about 7.5 million addresses remaining. Undoubtedly, this will become national news. When it comes to reacting to market narratives, cryptocurrency markets are well-known for being unpredictable. Investors shouldn’t be too shocked if ETH increases in value in the lead-up to or immediately following the achievement of 100 million non-zero addresses, given the publicity and goodwill the milestone is likely to generate.

With increasing number of balances that are not zero, some people think of Ethereum as an overly simplistic statistic because every new non-zero address doesn’t necessarily represent a new Ethereum user. Fortunately for Ethereum bulls, a plethora of additional measures also indicate significant, ongoing network expansion. According to a report recently published by the blockchain software development firm Alchemy, in 2022, the number of smart contracts implemented on the Ethereum main net will increase by an astounding nearly 300%. Because of the bear market in 2022, smart contract deployment growth essentially matched the rate of growth experienced in 2021. At the end of Q4 2022, 4.6 million smart contracts were active on the Ethereum blockchain, according to the research.

Jason Shah, Alchemy’s head of growth, observed that “the Web3 developer ecosystem is proven to be quite durable.” He continued, “This report demonstrates that they are as committed and driven as ever to create the ecosystem’s future—while openly acknowledging the needless obstacles we saw in 2022. In other places, the number of validators on the Ethereum network just topped 500,000. It wasn’t until July of last year that it reached 400,000. A computer with blockchain transaction verification and validation software is known as a network validator. Since it would be much more challenging for a malevolent group of verifiers to take over the network and destroy the blockchain, a bigger number of verifiers is regarded as an indication of network strength.

Ethereum’s price decrease (ETH is down roughly 67.5% from its record highs set in November 2021) has served as the main news in recent quarters due to the cryptocurrency bear market that started little over a year ago. However, the Ethereum protocol underwent a significant modification in September 2022 that is probably going to offer the cryptocurrency a significant long-term boost. Ethereum switched to the far less power-intensive proof-of-stake consensus method in September, replacing the proof-of-work consensus process. Along with easing worries about the cryptocurrency’s environmental impact, that could very well help it compete with Bitcoin, a considerably more energy-intensive rival, for institutional capital flows in the years to come, Ethereum’s inflation rate has also significantly decreased.

Ethereum’s annual issuance pace was really around 0.55% as of Sunday, January 15th, while its burn rate was a little under 1.2%. Because of this, Ethereum is currently deflating at a pace of about 0.65% annually. Ethereum’s inflation rate back when it was a proof-of-work blockchain was 4-5%. Some commentators have suggested that Merge’s deflationary effects may have prevented ETH from dropping below $1,000 and reaching new yearly lows in the rapid fallout of the FTX collapse. In contrast, following the FTX fiasco, Bitcoin did see new yearly lows.

The next significant upgrade to Ethereum will occur soon. The “Shanghai” hard-fork, which is anticipated in March, will introduce the ability to withdraw staked ETH for the first time. This development is seen as a major plus for the protocol because it will probably incentivize more investors to bet their ETH.