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The Ethereum layer-2 ecosystem reached an all-time high of 12.42 million daily transactions on Aug. 12, driven by the rapid growth of platforms like Coinbase's Base and the broader adoption of layer-2 solutions. At the same time, Grayscale's Ethereum Trust ETF (ETHE) reported outflows again, while other Ethereum ETFs saw positive inflows. Grayscale predicts that the crypto ETF market will soon start expanding, and recently launched a new MakerDAO Trust.
Ethereum Layer-2 Ecosystem Sets New Record
The Ethereum layer-2 scaling ecosystem has reached a new milestone after its daily transactions hit an all-time high of 12.42 million on Aug. 12, according to data from Growthepie. Leon Waidmann, the head of research at the Onchain Foundation, made a few comments about the achievement, and pointed out that scalability is improving rapidly and that user activity has reached its peak.
Since the beginning of 2024, the layer-2 ecosystem has seen a 140% increase in daily transactions. Growthepie's data only counts transactions executed by users or smart contracts, excluding system transactions.
This growth has been largely driven by the Coinbase L2 blockchain Base, which saw a big surge in transactions, peaking at over 4 million in late July. Basescan, a blockchain metrics platform for Base, reported a 700% increase in daily transactions over the past six months.
Base's explosive growth has mainly been fueled by the meme coin craze, as token creators flocked to lower-cost and higher-throughput chains to mint coins. The scaling industry metrics platform L2beat also pointed out a recent surge in overall throughput. In fact, the average transactions per second (TPS) doubled over the past two months as the number of scaling platforms has increased.
L2 activity (Source: L2beat)
Growthepie also reported that layer-2 networks now hold more stablecoins than Solana and Binance Chain combined, with 150% more stablecoins on layer-2 networks than on Solana and 94% more than on BNB Smart Chain. In contrast, daily transactions on Ethereum’s layer-1 have stayed relatively stable, averaging around 1.1 million for most of the year, according to Etherscan.
Additionally, average gas fees on the layer-1 Ethereum have fallen to yearly lows. This allowed Tether to mint 1 billion USDT for just 53 cents on Aug. 13, according to Arkham.
Grayscale’s ETHE Returns to Negative Flows
On the other hand, Grayscale’s Ethereum Trust ETF (ETHE) reported a big single-day net outflow of $31.01 million after its negative flows briefly paused. Farside Investors data reveals that the historical net outflow of ETHE has now reached $2.327 billion.
These latest outflows happened after a day of zero flows on Aug. 12, which was a milestone for ETHE as it was the first day without any outflows. Despite this negative flow for Grayscale’s ETHE, the overall market for Ethereum spot ETFs showed some positive movement, with a total net inflow of $24.3412 million on Aug. 13.
Ethereum ETF flow (Source: Farside Investors)
Since its inception, ETHE suffered a 25% reduction of its initial $9 billion ETH holdings. On the bright side, it took the Grayscale Bitcoin Trust (GBTC) nearly four months to achieve its first day without withdrawals.
Grayscale’s Ethereum Mini Trust ETF maintained stability with a single-day net outflow of $0.00, preserving its historical total net inflow of $221 million, highlighting the differing performance and investor confidence between Grayscale’s major and mini-trust ETFs.
Luckily, there were still some impressive inflows into other Ethereum spot ETFs. BlackRock's iShares ETF (ETHA) led the way with a single-day net inflow of $49.1244 million, bringing its historical total net inflow to $950 million. Fidelity’s ETF (FETH) also performed well, with a single-day net inflow of $5.4132 million, increasing its historical total net inflow to $351 million.
The total net asset value of Ethereum spot ETFs stands at about $7.649 billion. Despite the recent positive inflows, the historical cumulative net outflow for Ethereum spot ETFs has reached $377 million.
DRW Bets Big on Ethereum
DRW Holdings holds over $195 million worth of crypto ETFs, according to its latest Form 13F filing with the SEC. The majority of this exposure is through the Grayscale Ethereum Trust, in which DRW invested over $150 million.
DRW’s Grayscale Ethereum investment (Source: SEC)
While spot Bitcoin ETFs have attracted billions of dollars in net inflows from both institutions and retail traders, Ethereum-based funds have yet to achieve similar levels of interest. However, DRW's big investment in ETH ETFs could indicate a growing institutional appetite for Ethereum.
Interestingly, DRW’s holdings in ETH ETFs are over three times larger than its investments in Bitcoin ETFs, with the Grayscale Ethereum Trust being its third-largest holding, trailing only a fund tracking the S&P 500 and a gold trust. In contrast, DRW’s Bitcoin ETF investments are spread across multiple issuers, including Ark and 21Shares, Bitwise, BlackRock, Fidelity, and Proshares, with Proshares being its largest Bitcoin-centric holding.
DRW has been increasingly involved in the crypto industry since at least 2018. Its crypto-focused market-making unit, Cumberland, has been active as a liquidity provider for several Bitcoin ETFs and recently secured a "BitLicense" from the New York State Department of Financial Services.
Grayscale Predicts Expansion of Crypto ETFs
The market for cryptocurrency ETFs is expected to expand to include new types of digital assets and diversified crypto indexes, according to Dave LaValle, Grayscale Investments’ global head of ETFs. During an Aug. 12 webinar, LaValle stated that the market will see more single-asset products and index-based, diversified offerings. Grayscale, one of the largest issuers of crypto ETFs, currently manages over $25 billion in assets through its U.S.-listed crypto ETFs, which include single-asset Bitcoin and Ethereum funds.
The U.S. Securities and Exchange Commission (SEC) authorized Bitcoin ETFs to start trading in January, followed by Ethereum ETFs in July. No other types of cryptocurrency ETFs are currently allowed to trade in the U.S.
LaValle was surprised at the speed with which the SEC approved Ethereum ETFs, and stated that the regulatory path to launching Ethereum spot ETPs was faster than anticipated. He acknowledged that many in the market expected SEC denials instead.
Several proposed crypto ETFs, including new single-asset funds like Solana ETFs and diversified crypto indexes like the Hashdex Nasdaq Crypto Index ETF, are still awaiting regulatory approval. National securities exchanges like Nasdaq are also aiming to list options on Bitcoin and Ethereum ETFs soon.
The launch of crypto ETFs has seen great demand this year, with large-scale adoption by large financial institutions like Morgan Stanley. According to LaValle, the inflows have surpassed $15 billion, more than tripling the largest one-year inflow of any ETF in history.
Grayscale Launches MakerDAO Trust
Grayscale Investments also recently launched a new investment fund focused on MakerDAO’s governance token, MKR, according to an Aug. 13 press release. The Grayscale MakerDAO Trust offers qualified investors the opportunity to gain exposure to MKR, the utility and governance token for the Ethereum-based autonomous organization, MakerDAO.
This new fund is not exchange-traded and adds to Grayscale’s portfolio of single-asset crypto investment products. Earlier in August, Grayscale launched two other trusts for Bittensor’s and Sui’s native protocol tokens.
Grayscale is well-known for its Bitcoin and Ethereum ETFs, but also operates private single-asset funds for other protocol tokens like Basic Attention Token (BAT) and Chainlink (LINK).
MakerDAO is a decentralized finance (DeFi) protocol that issues the U.S. dollar-pegged stablecoin Dai and operates an ecosystem of on-chain credit products. In July, MakerDAO announced plans to invest $1 billion in tokenized U.S. treasury bonds.
The Grayscale MakerDAO Trust allows investors to engage with the growth of the entire MakerDAO ecosystem, according to Rayhaneh Sharif-Askary, Grayscale’s head of product and research.
