Usage of the Ethereum network has evolved dramatically over the years from being used almost exclusively for ICOs in 2017 to the emergence of DeFi in 2020 and then NFTs in 2021/2022. The usage has also become more distributed over time going from just a few apps in 2017/2018 dominating the network to a much more diverse set as you can see below.
Casey’s chart clearly shows the extreme trends that have played out over the years with regards to Ethereum blockspace. I mean, just look at 2018 and 2019 - those years were dominated by 0x and MakerDao - 2 apps that now only take up a very small portion of Ethereum blockspace. Though this isn’t “bearish” for 0x or MakerDao since both of these apps are still heavily used, but it does clearly show how dramatic the change has been since 2018 in terms of how many new gas guzzlers we have now.
What’s even cooler about this chart is we can spot where DeFi summer began by just looking at Uniswap’s share of gas consumed. Uniswap took off in usage during DeFi summer because of liquidity mining - everyone was farming “valueless governance tokens” and needed somewhere to sell them - Uniswap was the obvious choice. On top of this, many protocols opted to create a “pool 2” for their native token which was an incentivized pool that had liquidity for people to dump into - again, these pools were almost exclusively created on Uniswap. This all lead to a massive flywheel effect that led to a substantial increase in Uniswap’s general popularity and usage which in turn led to a large increase in Uniswap’s consumption of Ethereum gas.
There’s also another reason why things have changed so dramatically over the years and that has to do with how smart contracts are coded. Back in the 2017-2020 era, smart contracts were quite gas inefficient because Ethereum gas fees were extremely low and developers didn’t feel the need to optimize their contracts. It wasn’t until DeFi summer of 2020 when developers started taking gas efficiency seriously which can be pointed to as a reason that some of the big name apps (0x and MakerDao) are now using much less gas even though they are bigger than in 2018/2019.
Obviously going forward it’s going to be harder and harder to glean real insights from this chart as users continue to migrate to layer 2’s. I would even go as far as to say this chart won’t change very much from here on out - we’ll probably see layer 2’s themselves keep growing in layer 1 gas usage, but most new apps are now opting to deploy exclusively to layer 2’s which means they won’t show up on the layer 1 gas consumed chart at all. This is of course healthy for Ethereum since its vying to be a settlement network for layer 2’s.
Ethereum blockspace is such a fascinating topic for me because we get to study things like the trends of gas consumption over time. Given Ethereum is still such a young network, we can expect these trends to evolve dramatically over the next few years and the Ethereum of today will most likely look very different to the Ethereum in 5 years - maybe I’ll do a follow-up post in 2027 to see where we’re at!
Have a great weekend everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.
525 editions, still here reading, keep killing it bro! <3