JP Morgan Analysts Express Disappointment Over Ethereum Activity Post Shanghai Upgrade

Key Points:

• JP Morgan analysts express disappointment in Ethereum’s post-Shanghai upgrade performance, citing declining metrics such as transaction volume, active addresses, and DeFi value locked.
• They attribute the lackluster activity to various negative factors over the past year, including collapses in the crypto market, regulatory uncertainties, waning institutional interest, and challenges in the Layer 2 ecosystem, while looking to the EIP-4844 upgrade for potential improvements.

In a report led by Nikolaos Panigirtzoglou, JP Morgan analysts have voiced their disappointment with Ethereum’s post-Shanghai upgrade performance. 

Despite a 50% increase in Ethereum staking since the upgrade, the JP Morgan analysts found the surge in network activity to be underwhelming. Key metrics such as daily transaction volume, daily active addresses, and the total value locked (TVL) in decentralized finance (DeFi) protocols on the Ethereum network have all experienced declines, painting a subdued picture of the network’s vitality. All eyes are now on the upcoming EIP-4844 upgrade, with the question of whether it will be a game-changer looming large.

The decline in Ethereum activity is attributed by analysts to a confluence of “bearish forces” that have dominated the past year. These include the collapses of FTX and Terra, regulatory uncertainties and crackdowns in the United States, waning institutional interest in crypto, and a slowdown in venture capital funding. These factors seem to have outweighed the positive impact of the Shanghai upgrade, which allowed Ethereum validators to withdraw staked ether previously locked in the network.

Furthermore, the Ethereum Layer 2 ecosystem has exhibited mixed results. While Optimism has seen an uptick in activity, Arbitrum’s performance has waned. Interestingly, the TVL on both Arbitrum and Optimism has declined since the end of March, just prior to the implementation of the Shanghai upgrade.

These JP Morgan findings highlight the complex dynamics at play within the Ethereum network and the broader crypto landscape. Despite optimistic upgrades and improvements, external market forces continue to exert significant influence over the network’s performance.

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