Ethereum Monthly Analysis – May 2022

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The crypto market faced significant turbulence in May 2022, as broad declines across risk assets intensified investor caution. After a weak start to the year, the first two weeks of May brought steep sell-offs, prompting many market participants to adopt a wait-and-see approach. Ethereum, the second-largest cryptocurrency by market capitalization, was not immune to this bearish sentiment. In fact, both the Ethereum network and its native token, Ether (ETH), underperformed across most key metrics compared to previous months.

May marked the worst monthly performance for ETH in 2022, with prices dropping approximately 27.80%—a sharper decline than Bitcoin’s 15.45% fall during the same period. This article provides a detailed breakdown of Ethereum’s performance across market, blockchain, and decentralized finance (DeFi) indicators.

Market Indicators

Market Capitalization

Ethereum’s market capitalization followed a downward trajectory throughout May, mirroring the price decline of ETH. On May 1, the network’s market cap stood at $337.4 billion**, peaking briefly at **$356.2 billion on May 12. However, the remainder of the month saw consistent declines, hitting a low of $222.1 billion on May 22—the lowest point since early 2021.

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By May 27, Ethereum’s market cap had fallen further to $208.5 billion, marking the lowest valuation for the leading smart contract platform in over a year. At the time of writing, Ethereum maintained a 17.35% share of the total cryptocurrency market, underscoring its continued dominance despite the downturn.

Ether Supply Growth

Despite price volatility, Ether’s total supply continued to grow steadily throughout May. At the beginning of the month, the circulating supply was 118,906,787 ETH, factoring in block rewards, uncle rewards, uncle inclusion rewards, and newly minted staking rewards.

By May 31, the supply had increased to 119,218,683 ETH, representing a net addition of 311,896 ETH. This marked a slight acceleration in supply growth compared to April, which saw an increase of 279,972 ETH. The consistent supply expansion reflects ongoing network activity and validator participation in Ethereum’s staking ecosystem.

Blockchain and Network Metrics

Daily Transactions

Transaction volume spiked during the initial days of May’s market crash, as holders rushed to sell off assets. The highest daily transaction count occurred on May 13, reaching 1,342,405 transactions—the second-highest daily volume recorded on Ethereum in 2022.

Following this peak, transaction activity gradually declined. The lowest point came on May 7, with only 1,051,489 transactions processed. By month-end on May 30, transaction volume had settled at 1,065,407, indicating reduced user activity amid market uncertainty.

Unique Addresses

The number of unique addresses—representing distinct entities active on the network—grew steadily throughout May. At the start of the month, there were 194,930,328 unique addresses. By May 31, this figure had increased to 197,622,085, a rise of 2,691,757 addresses or 1.3% growth.

The highest number of unique addresses was recorded on May 10, reaching 197,622,085. This growth suggests sustained user onboarding despite price pressures, reinforcing Ethereum’s foundational role in the Web3 ecosystem.

Daily Active Addresses

Daily active addresses closely followed transaction trends, peaking on May 13 at 641,750, coinciding with the highest transaction volume. This surpassed the previous 2022 high set on April 30 (639,040 active addresses).

Activity dipped toward month-end, with the lowest count on May 30 at 418,023 active addresses. This marked a continuation of a trend where daily active addresses remained below 500,000—a sign of reduced short-term engagement during bearish conditions.

Average Transaction Fee (USD)

Ethereum’s average transaction fees are notoriously high compared to competing blockchains. In May, fees surged dramatically due to network congestion caused by the highly anticipated launch of the Otherside NFT collection over the first weekend.

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On May 1, average fees spiked to an all-time high of $200.06**, driven by massive demand for minting NFTs. While most of these fees were burned under EIP-1559, the spike highlighted ongoing scalability challenges. Fees quickly dropped afterward but saw another notable increase around **May 12**, reaching **$98.14. The lowest fee of the month was recorded on May 28 at just $3.73, reflecting reduced network congestion later in May.

Average Network Hash Rate

Ethereum’s average network hash rate continued its upward trend in May, indicating sustained miner participation despite ongoing speculation about the transition to Proof-of-Stake.

At the beginning of May, the hash rate stood at 1,082,118.5 GH/s. It peaked on May 13 at 1,126,674.3 GH/s, reflecting strong computational support for the network. The lowest point came on May 7, dropping to 1,060,736.6 GH/s—still within normal operational ranges.

DeFi Performance

Market Share

Despite broader market declines, Ethereum strengthened its position as the leading DeFi platform in May. Its share of total DeFi activity surged from 55.72% on May 1 to 64.13% by May 30—a significant gain amid declining usage on competing chains.

This reversal broke a trend seen in late 2021 and early 2022, where blockchains like Binance Smart Chain (BSC) and Solana were gaining ground in DeFi adoption. By month-end, BSC held 8.04% of the DeFi market share, while Solana accounted for 5.42%—the only other networks above 5%.

Total Value Locked (TVL)

While Ethereum’s market share grew, its Total Value Locked (TVL) declined by approximately 37% during May. TVL peaked early in the month at $111.33 billion** but fell sharply to a low of **$66.87 billion by May 28.

MakerDAO remained the dominant protocol throughout the month, accounting for over 13.92% of Ethereum’s TVL. Curve Finance ranked fourth but led among protocols focused on stablecoin trading, despite a monthly TVL drop exceeding -7.8%.

Other top protocols included Lido Finance and Aave, with TVLs of $8.01 billion** and **$5.5 billion, respectively—highlighting continued confidence in liquid staking and lending platforms even during downturns.

Frequently Asked Questions (FAQ)

Q: Why did Ethereum’s price drop so sharply in May 2022?
A: The decline was driven by broader macroeconomic factors—including rising interest rates and inflation fears—combined with crypto-specific events like the Terra (LUNA) collapse and NFT-driven network congestion.

Q: Did Ethereum’s fundamentals weaken during this period?
A: Not necessarily. Despite price drops and declining TVL, key metrics like unique addresses and hash rate remained strong or improved, indicating underlying network resilience.

Q: How did the Otherside NFT launch impact Ethereum?
A: The launch caused massive network congestion and record-high gas fees ($200+), highlighting scalability issues but also demonstrating strong demand for Ethereum-based NFT projects.

Q: Is Ethereum still the leader in DeFi?
A: Yes. In May 2022, Ethereum reclaimed over 64% of the DeFi market share, reversing earlier losses to competitors like BSC and Solana.

Q: What does supply growth mean for ETH investors?
A: Steady supply growth reflects ongoing staking and network activity. However, post-Merge deflationary mechanics could shift this dynamic in the future.

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