Ethereum Gas Fees Impacting DeFi Activity
Recent data from Kaiko reveals that decentralized finance (DeFi) activity on Ethereum is gaining momentum, largely due to the trend in gas fees in the first three weeks of November. The surge in gas fees is driven by increased activity on Uniswap, particularly from the rising transaction volumes from meme coins, which has led to higher block space demand and subsequently increased gas fees.
Gas fees have been volatile but generally higher in November, with the average cost of sending a transaction standing at 45.13 Gwei as of November 20, a significant jump from late October. This increase in gas fees is usually associated with the rise in DeFi and other on-chain activities like NFT minting and trading, suggesting that the markets could be gearing up for a positive movement.
DeFi TVL Increases, Uniswap Prices Stagnant
The total value locked (TVL) across all DeFi protocols has risen to over $46.6 billion as of November 21, indicating an increase of nearly $5 billion since early November. Despite the high gas fees associated with Ethereum, it still remains a popular platform for deploying DeFi apps, with $25.4 billion in TVL. Uniswap, as one of the largest protocols, has a TVL of $3.216 billion.
However, while UNI prices have seen a 30% increase from mid-October, they have remained stagnant below $5.6, with trading volume and participation tapering off. This indicates a lack of momentum and sustainability in the current uptrend. However, a solid close above November highs with expanding volumes could potentially lead to further gains, with UNI possibly retesting 2023 highs of around $7.2.
Hot Take: Implications for DeFi and Uniswap
The rise in Ethereum gas fees and increased DeFi activity signifies potential market preparation for a positive movement, with tokens of critical protocols like Uniswap possibly benefiting. However, the stagnation of UNI prices despite increased TVL and activity reflects the need for sustained momentum to see significant price movement in the future.
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