The Decentralised Finance narrative appears to have buttressed Ethereum network activity as miners piled into the platform to capitalize on a high-risk-reward ‘yield farming’ craze.
Ethereum’s hashrate reached an all time high this week.
The blockchain’s network has surged due to DeFi interest.
Miners raked in over $166 million in fees in September.
Ethereum’s price increased month after month this year in tandem with its total proof of work (PoW) hashing power, which is now back at all time high levels. While it remains to be seen whether this will remain so once the network switches to proof of stake (PoS), current network activity shows a hashrate above 260 TH/s – a history-making record.
This record comes after an almost uninterrupted growth curve of 80% since January of 2020.
A race to the stratosphere, and then some?
Per Glassnode, the recent influx of new miners was probably caused by the rapid growth of DeFi activity and the record-breaking fees associated with activity on the network. At the height of the DeFi hype, this outlet underlined the systemic risks posed by the DeFi space, which will continue to overshadow the platform the until scalability is solved.
Still, it’s by no means a good idea to throw the baby out with the bathwater, and miners appear to share this sentiment.
In September, miners earned over $166 million in fees for transactions uploaded to the blockchain. This alone led to a miner craze which ultimately pushed Ethereum to break record transaction territory similar to those achieved when CryptoKitties was at its peak.
What a time to be alive.
Today, transaction fees on Ethereum have calmed down and are about 80% from all time highs. However, fees are notably still average when compared to the 2017-ICO network hype.
Ethereum’s last peak occurred on August 9th, 2018, when the hashrate reached 246TH/s. This year, the crypto paltform started out with a hashrate of 144TH/s, reached 200 TH/s in August, and broke all time highs this week.
Why is Hash Rate Important for Ethereum?
A higher hash rate informs miner activity in the network. This is not only good for the cryptocurrency economy but also for the blockchain’s inherent security, which protects against 51% attacks. Earlier in the year, Ethereum’s competitor, Ethereum Classic (ETC), suffered a 51% attack which compromised the network temporarily and could result in reversed transactions and effectively re-writing blockchain history. Such a scenario is devastating for any blockchain’s integrity and perception.
However, current data does not indicate this is likely to happen, with DeFi continuing to ‘lock in’ funds after having recently reclaimed the $10 billion TVL landmark.
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