- Ether trading volumes surpasses bitcoin’s for the first time on Coinbase in the second quarter.
- A surge in interest in decentralized finance and NFTs, which largely use ethereum, was a key factor.
- Coinbase said the launch of its staking product also drew people to ether ahead of a key network change.
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Ether was the most-traded cryptocurrency on Coinbase in the second quarter of the year, jumping ahead of bitcoin as excitement grew around decentralized finance and staking – two use cases that have drawn investors to the world’s second-biggest cryptocurrency.
Trading in ether made up 26% of total volumes in the second quarter, up from 21% in the previous three months, Coinbase’s second-quarter earnings showed on Tuesday.
Bitcoin trading volumes fell sharply quarter-on-quarter from 39% to 24% of the total. Volumes for all other crypto assets climbed from 40% to 50%.
Total trading volumes surged to $462 billion in the second quarter from $17 billion a year earlier, helping Coinbase’s earnings smash expectations.
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Coinbase said the growth in ether trading was driven by interest in decentralized finance (DeFi) and non-fungible tokens (NFTs), two crypto applications that commonly use the ethereum blockchain. Ether is the native cryptocurrency of ethereum.
DeFi refers to financial services that use blockchain technology to get rid of the need for centralized authorities such as clearing houses and banks. NFTs are pieces of crypto technology that cannot be exchanged with one another, onto which collectible items such as art can be written.
Coinbase said the launch of its ethereum staking product also spurred ether trading on the platform.
The ethereum network is soon to switch away from a “mining” system to a “staking” system, where users put forward ether to gain the right to verify transactions and earn more coins. JPMorgan said the change could turn the staking industry into a $40 billion industry by 2025.
The launch of an ethereum staking product in April drove staking adoption, Coinbase said, helping the exchange end the quarter with 1.7 million users earning yield on their crypto.
“We are seeing crypto quickly mature from its initial use case of trading bitcoin to the trading of thousands of new assets, and the adoption of new use cases like decentralized finance (DeFi), non-fungible tokens (NFTs), smart contracts, decentralized autonomous organizations (DAOs), and more,” Coinbase said in its earnings report.