Ethereum’s Q1’24 Share Of DEX Trading Volume Shrunk to Under 40% Despite Recording $70B in March 2024 Trades

Ethereum (ETH) will be glad to have seen the back of the first quarter 2024. That’s come out in a recent BanklessTimes.com report on the decentralized exchange (DEX) market share. The crypto news outlet reports that ETH’s Q1’24 trading volume dipped under 40% for the first time in its history.

Analysts have attributed ETH’s woes to its underwhelming performance, particularly in February. During the month, ETH’s volumes shrunk to a record low of 30%. It also didn’t help that alternative DEXs registered impressive gains over the quarter.

Why Did Ethereum Lose Ground?

BanklessTimes’ investment expert Elizabeth Kerr has shared her thoughts on the report. She suggests that the opening up of the DEX landscape has put pressure on Ethereum’s market dominance. Therefore, it isn’t surprising to see its numbers fall so drastically.

Kerr explained:

Competing chains provide options that resonate with crypto lovers disillusioned with Ethereum’s offerings. Yes, it’ll take a significant feat to upstage it. However, the team at ETH will look at these numbers as a wake-up call for urgent improvements if it’s to retain its dominance in the DEX space.

BanklessTimes’ Investment expert Elizabeth Kerr

The analyst insisted that gas fees remain a major stumbling block in Ethereum’s development plans. Some ETH users claim to have spent upwards of $100 in transaction fees during peak periods over the quarter. Others said they paid nearly $400 to swap their assets with others on the chain.

Some of the DEXs that are making a dent on ETH’s market share are Arbitrum, Solana and Base. Arbitrum for instance rode on its STIP incentive program to make significant inroads into the DEX ecosystem in January and February 2024. Its thriving activity saw it leapfrog ETH’s trading volume at that time.

Ethereum’s $70B Bounce Back

It wasn’t all gloomy for the premier smart contract blockchain, though. The platform had a better showing in March, with net transactions worth $70 billion. Those returns, resulting from a cross-market increase in crypto trading, saw ETH’s market share rebound towards the 40% mark at the month’s end.

Additionally, the dominant blockchain by volume reported a 36% increase in ETH restaking on the EigenLayer. At the quarter’s end, the amount of staked ETH on the platform exceeded the 4 million mark. Leading this charge were Liquid Staking Protocols, holding 2.28 million ETH. Of these, EtherFi was the most active, attracting 21% of the total transacted volume.

Kerr concludes that ETH developers and projects will look to build on these positives going into H2’24. She categorically states, however, that the longer ETH takes to sort its gas fee issues, the more its dominance will come under intense pressure.