July 2022 in Numbers: market braces for The Merge and exits the zone of extreme fear

• On 28 July, the MVRV Z-Score crossed the upper bound of a deeply oversold zone at 0.1. This is another signal that the market cycle has bottomed.
• The Bitcoin price surpassed its realized value. This points to improved market sentiment and indicates that many investors have stopped realizing losses.

• Since the activation of EIP-1559 in August 2021, the Ethereum network has burned more than 2.5 million ETH. Compared with the prior month in July, the burn rate halved — 120,000 ETH versus 60,000 ETH.
• This dynamic is explained by reduced activity on decentralized exchanges and NFT marketplaces, which are the main burn mechanisms. This, in turn, is linked to market conditions.
• Against a local Ethereum rally in the latter half of the month, there was inflow of assets to wallets on centralized exchanges. The share of ETH locked in DeFi smart contracts, by contrast, fell by almost 1%.

• At July’s end, the number of ETH on the Ethereum 2.0 deposit contract exceeded 13.18 million coins. The monthly increase was 1.5% — in the previous month it rose 1.9%, in May 5.4%.
• Active addresses interacting with the second iteration of Ethereum rose by 1.6% (1.9% in June).
• The pace of growth of these metrics softened slightly, likely due to the discount on stETH tokens from Lido, which trade about 2.5% below the underlying asset (on Curve).
• The number of addresses with balance ≥ 32 ETH continued to rise. In July, the figure surpassed 177,000 (+2.5% vs last month).

• Bitcoin hash rate (7 MA) rose 4% to 211.93 EH/s. Since the start of the year, the reading is up 16.6%. The uptick in hash rate may reflect a gradual revival of price, bringing older mining hardware back online.
• As hash rate climbs with price recovery, a rebound in network difficulty is expected.

• In July, the average Ethereum transaction fee fell 47% month-on-month. Fees rarely exceeded $4, signaling reduced activity in DeFi and NFT segments.
• Daily Ethereum network fees in July were around 2.5% of November’s peak (~$1.9 million versus ~$82 million). In late 2021, the average fee per transaction was typically above $50.
• Bitcoin network fees remained largely unchanged in July, occasionally edging above $2, indicating modest on-chain activity.

• In July, total Bitcoin miner revenue fell 9% to $609.7 million. The metric has been falling since March, but the pace of decline slowed. This points to a likely end of miner capitulation.
• Total Ethereum miner revenue fell by only 4%, though in the previous period the drop exceeded 50%. This also argues for a market-cycle bottom.

• Trading volume on leading crypto exchanges was unchanged from the previous month, reaching $660 billion.
• FTX outpaced Coinbase in the last three months and climbed to second place in the overall exchange ranking. In July, volumes on their platforms stood at $56 and $51 billion. Coinbase dropped out of the top three, ceding to OKX with $54 billion. Binance remained the undisputed leader with $428 billion.

• July saw heightened investor interest in Ethereum-based futures — volumes reached $930 billion for the first time since May 2021. From 12 to 28 July, the daily figure exceeded the equivalent for all altcoin futures, and on some days even for Bitcoin futures.
• Aggregate open interest rose 34.5% (from $19.5 to $26.2 billion). As Ethereum’s price rose, the share of liquidations in total open interest surpassed Bitcoin futures on several occasions.

Despite the absence of significant activity in the options segment, open interest in Ethereum options surpassed Bitcoin options and briefly exceeded $7 billion. The level matched May and November 2021, when the crypto market was aiming for new highs.

Despite the absence of major activity in the options market, the open interest in Ethereum options surpassed Bitcoin options and at times exceeded $7 billion. The level matched May and November 2021 when the market sought new highs.

• In July the TVL of DeFi smart contracts rose 18% to $88.92 billion, aided in part by a local rally in the market.
• The unchanging leader by TVL is Ethereum, with $51.28 billion (vs $42.83 billion in June). The ETH-denominated value, however, fell 22% to 30.69 million ETH.
• The Tron ecosystem rose to third place by TVL. Inflow to applications on that network totaled almost $25 billion TRX (+41% versus June).
• The moves were driven by Justin Sun’s plan to spend up to $5 billion to rescue crypto companies and the fact that the team managed to restore parity of the algostablecoin USDD to the dollar.

• As of July, nearly all DeFi top-20 tokens by market cap were in the green — a reversal from Q2 2022.
• The best performer was yEarn Finance’s YFI token — up 86% month over month. The improvement was aided by the service’s ERC-4626 integration.
• The market value of Uniswap, Curve and SushiSwap tokens also rose significantly, signaling renewed user interest in decentralised platforms.
• Among Ethereum-based projects, governance leader MakerDAO dominated TVL ($8.45 bln). In second place, Lido — up 52% in a month — after which the team announced the launch of the Ethereum 2.0 liquid-staking service on Layer-2 networks.

• Decentralised exchanges remain dominant in DeFi TVL — more than 31% of the total, or $27.73 bln.
• In second place are lending protocols ($18.18 bln), and third are cross-chain bridges ($11.68 bln).
• Yield-farming projects have been displaced from the top-five, underscoring the popularity of this earnings method among DeFi users.
• As July ends, the combined market cap of “Bitcoin on Ethereum” rose to $6.5 bln. The WBTC dominance index slipped to 84%.

• July saw a decline in average daily transactions across most networks studied. In Avalanche, the metric fell by 15%, partly due to traffic shifting to the subnets.
• The Ethereum network processed around 1,199,149 transactions per day — up 15.7% from the previous month. Higher on-chain activity was driven by lower transaction fees — gas price on the network has fallen by 86% since the start of the year.

• In July, the volume on leading decentralised Ethereum protocols reached $57.5 billion, the lowest for the year.
• Uniswap dominates this segment. The platform’s turnover for the month was almost $38 billion. Runners-up were Curve and Synthetix, with around $8 billion and $2.5 billion respectively.

• Ethereum price gains boosted TVL in Layer-2 protocols, while users withdrew 17% of total liquidity. Likely upwards of 615,000 ETH moved into yield-optimisation tools as market conditions improved.
• More than 300,000 of these ETH left the Arbitrum protocol. One reason could be the postponement of Odyssey’s educational event. In mid-July the team rolled out the Nitro upgrade, which was necessary to resume Odyssey (timelines for restart remain unclear), and added support for Tron’s stablecoin USDD on the network.

• July’s market cap of stablecoins was virtually unchanged at $152 billion.
• The dominant issuers broadly trimmed or slowed issuance. An exception was Maker’s DAI, with supply up by $500 million during the month.
• DeFi protocols Aave and Curve announced plans to develop their own algorithmic stablecoins. By month-end the Aave community approved the launch of the USD-backed GHO stablecoin. Details on Curve’s similar product remain undisclosed. It is known only that the asset will be backed by a mechanism similar to Tron’s USDD.

• OpenSea, the leading NFT marketplace, continues to post subdued activity in 2022. July volume stood at $528 million.
• Despite some positive signs in NFT activity, key metrics remain at record-low levels. Sorare stood out, with more than 400,000 trades on collectible cards worth $32 million.
• On-chain activity analysis supports the hypothesis of volume — July saw a revived activity on Ronin, a sidechain re-launched after a hack. A modest rise in NFT transactions occurred on Flow and Immutable as the market re-energised.

• Open interest in regulated Bitcoin futures on the CME continued to rise — total contracts for 5 BTC rose by 9.1%.
• There were no major shifts in the balance of power in July. Different categories of players held roughly the same levels of longs and shorts.
• Among Bitcoin microfutures, the situation was similar. The difference was the dominance of short positions among Commercial players.

• In microfutures on Ethereum, Non-Commercial and Nonreportable players hold longs over shorts, signaling optimism about Ethereum’s prospects as the second-largest cryptocurrency.
• Conversely, Commercial players are building short positions. The number of short positions among Commercial players increased by about 42% this month.

In July Ethereum developers approved the Goerli testnet’s transition to the Proof-of-Stake algorithm, which will be the final milestone before full deployment on the Ethereum network. Consequently, the community asked: what about miners? Here are the latest materials for readers: