Majority of new Ethereum wallets dumped quickly
Majority of new Ethereum wallets dumped quickly
The Phenomenon of Short-Lived Ethereum Wallets
Ethereum, known for its leadership in decentralized finance (DeFi), non-fungible tokens (NFTs), and smart contracts, holds a prominent position as the dominant cryptocurrency in the altcoin market. With its popularity and widespread adoption, Ethereum experiences the highest rate of new address creation compared to other blockchains. However, an intriguing trend has emerged – data suggests that a significant portion of these new Ethereum wallets are abandoned shortly after their creation.
A Short Lifespan for New Ethereum Wallets
While Ethereum is second only to Bitcoin in terms of unique addresses, on-chain transaction data reveals a surprising pattern of short-term usage among new Ethereum wallets. According to crypto data analyst Jack Gorman, over 70% of new Ethereum wallets are used for less than 30 days before their owners cease all transactions. By examining a customized graph on Dune Analytics, a blockchain ecosystem analytics platform, Gorman observed the rate of creation and abandonment of new Ethereum addresses.
The data showcases Ethereum’s remarkable ability to generate new addresses, with an astonishing 2 million new wallets created per month. Within the past year, the network has witnessed the creation of over 26.69 million wallets. However, the majority of these new addresses demonstrate minimal activity. About 66% of new wallets are only active for a single day, while 95.5% remain active for less than ten days. For example, in May 2023 alone, 2.41 million addresses were created, but only 6.91% of them engaged in transactions after 30 days.
Furthermore, monthly active addresses range from 4.5 million to 7 million in total. This implies that a significant portion of wallets does not endure long-term usage, with only 1.9 million remaining active for more than 10 days. Out of these, a mere 400,000 addresses have completed over 100 transactions within the past year.
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Exploring the Causes of the Ripple Effect
The prevalence of short-lived Ethereum wallets raises intriguing questions about the factors contributing to this phenomenon. A deeper exploration provides valuable insight into adoption rates and the longevity of Ethereum addresses. One of the primary contributors to the creation and abandonment of addresses can be attributed to a group of individuals known as airdrop hunters.
Airdrop hunters employ a strategy of creating multiple addresses with the sole intention of farming ERC-20 tokens through airdrops. These individuals take advantage of various projects that distribute tokens to Ethereum holders free of charge. As a result, the sheer number of new addresses generated can be attributed to these airdrop hunters who seek to maximize their potential rewards.
While the retention rate of new wallets remains low overall, it is important to note that Ethereum boasts a diverse range of address holders, including smart contract addresses and centralized exchanges. The most notable among them is the Eth2 Beacon Deposit Contract, which holds the largest address with over 27.6 million ETH and represents a significant 22.9% stake in the network.
Conclusion
The blockchain industry, led by Ethereum, continues to experience rapid growth and widespread adoption in various sectors such as DeFi and NFTs. Despite this success, the proliferation of short-lived Ethereum wallets reveals an underlying trend. The majority of new Ethereum addresses are created and abandoned within a short period.
While airdrop hunters play a significant role in the creation of these addresses, Ethereum’s diverse holder ecosystem also accounts for the generation of new wallets. With improved understanding and analysis of this phenomenon, the industry can further enhance adoption and longevity, creating a sustainable blockchain ecosystem for the future.
