The rapid growth of decentralized finance (defi) protocols is contributing to the increasing proportion of ETH supply that is now locked in smart contracts. More than 15% of the total ETH supply is now locked, compared to 11.5% from a year ago. This growth led to the inevitable decline of BTC dominance.
According to a report, over 5% of ETH is locked up in the WETH (wrapped ether) smart contracts, enabling it to interact with other tokens more easily. Most of this WETH has then been locked up in defi contracts, including Maker, Uniswap, and Balancer.
The report also notes that aside from “defi use cases via WETH, the largest ETH balances in smart contracts are for exchange multisigs.”
Data from Dune Analytics showing the current WETH supply on September 16, 2020.
While exchange multisigs simply “represent custodial passive holding, the other contracts (WETH, Compound, etc.) are all examples of how ETH