According to a report from Coin Metrics, the ever-impending Ethereum flippening has finally happened this month. The term once used to describe a coin — in many cases suspected to be Ethereum itself — overtaking Bitcoin in market capitalization, this “flippening” rather refers to ERC-20 tokens now making up more transactions on the Ethereum network than ETH itself.
But since May 2019, token transactions have been threatening to pass non-token transactions. As of November 10th, ERC-20’s had about 303,000 daily transactions vs about 290,000 for ETH.
If you don’t know, ERC-20 tokens are easily-minted tokens on the Ethereum network that aren’t Ethereum themselves, but rather coins controlled by third-parties. In some cases, they were — and are — used during ICOs to raise funds for the launch of independent, non-Ethereum blockchains. In other cases they themselves are the coins entire Ethereum-based cryptocurrencies are based on.
While the ease with which these tokens could be minted contributed to the excesses of the ICO boom, the ERC-20 tokens have also created network value—and spawned an almost unimaginable amount of alt currencies.
Here’s what the share of transactions on the Ethereum network looks like over time. In the below chart, you can see Ethereum network transactions from non-token (ETH), ERC-20, and ERC-721. Since May of this year, it has appeared inevitable that ERC-20 transactions would overtake ETH.
What has caused the Ethereum flippening?
As Coin Metrics notes, the primary reason for the Ethereum/ERC-20 token flippening is the growing popularity of USDT.
A lot of ERC-20’s rapid transaction count rise has also been due to USDT… it started gaining ground in May and now has over 80% of the share of transaction counts of the top ten tokens.
USDT is the symbol for Tether, which if you didn’t know is a cryptocurrency that holds a value intended to mirror the U.S. dollar. USDT transactions have completely dwarfed essentially all other ERC-20 transactions over the last several months, including chains such as OmiseGo, DAI, and more.
Be sure to check out the rest of Coin Metrics’ report, which details the “flippening” further as well as more recent Ethereum network developments — like the explosion of ERC-721 tokens in recent days thanks to the sudden popularity of an Ethereum-based card game called “Gods Unchained.”