Ethereum sees a massive spike in address activity, surpassing the all-time high

The number of active addresses on the Ethereum network has suddenly jumped to a new all-time high of about 1.1 million ETH daily active addresses making a total of 1.64 million transactions. Coinbase’s Conor Grogan suggested that the increase in activity comes from a high number of token transfers per unit of gas rather than from greater adoption.

According to data from on-chain analytics firm Santiment, this spike shattered the previous record of daily active addresses on the network of the second-largest cryptocurrency by market capitalization of 718,000 back in January 2018, when the cryptocurrency was nearing its then-new high of $1,400.

Noteworthy, the surge occurred during a recent meeting of the US Federal Open Market Committee (FOMC), a brand of the Federal Reserve System that determines the direction of US monetary policy. The meeting led to an interest rate hike of 75 basis points.

A daily active address is defined as one that made a transaction over the past 24 hours, with the number of daily active addresses indicating on-chain activity for developers and projects. One active address does not necessarily mean one active user, as anyone can create as many addresses as they’d like on the Ethereum blockchain. While one user can have hundreds of addresses, some addresses may be related to hundreds of users by belonging to services that custodying their funds.

Santiment’s team noted it was still studying the daily active address surge struggling to understand what caused the sudden spike.

Meanwhile, the one proposed theory was that of Coinbase’s Head of Strategy, Conor Grogan, who suggested the rise came from a high number of token transfers per unit of gas rather than from growing adoption.

According to Grogan’s blog post, the rise could be because “the market weighed mundane things to do (send/receives, like with Binance doing a maintenance sweep) at highs versus what most of us would classify as “productive” activity like Defi/NFTs (which are more gas intensive).”

The rise came shortly after Ethereum’s long-awaited transition from an energy-intensive Proof-of-Work (PoW) consensus mechanism to a more efficient Proof-of-Stake (PoS) consensus, scheduled for September.

The Ethereum Merge is described as the network’s current mainnet merging with the Beacon Chain’s PoS system, setting the stage for future scaling upgrades, including sharding. The move is expected to reduce Ethereum’s energy consumption by 99.95%.

Protocol support engineer at the Ethereum Foundation Tim Beiko made the September projection. Beiko has also noted that the Merge timeline is very likely to change over time.

Notably, the Merge will not expectedly reduce Ethereum’s transaction fees, but it will have a significant impact on energy use, opening the door for upgrades that will reduce transaction fees.

The spike in activity was followed by a 15.5% pump on Ether over the past 24 hours from $1,425 to $1,648, according to CoinGecko.