The proportion of ether (ETH, -1.71%) held on centralized exchanges (CEXs) dropped to 9.4% of the total supply today, the lowest in three years, according to data from crypto intelligence platform OKLink.
- Out of the 117 million ether in circulation, only 11 million were held on addresses related to CEXs, OKLink data shows. Ether is the second-largest cryptocurrency by market capitalization.
- That level is the least since February 2018, when about 9 million of 97 million ether were held in CEX addresses, according to OKLink data.
- The main factor for the outflow is decentralized finance (DeFi), Eddie Wang, senior researcher at OKLink, told CoinDesk.
- Wang pointed to wrapped ether (WETH) being the top address in the Ether Rich List, as well as deposits and liquidity pools of popular DeFi protocols to explain the outflow of ether from CEXs.
- Wrapping ether is the process of converting it to ERC-20 tokens, which renders the digital asset easy to swap and transfer. Because of these features, WETH is a key driving force for DeFi.
- WETH represents 5.7% of total ether in circulation, according to intelligence platform TokenView.
- Ethereum 2.0 might be another factor, Wang said. More than 6.5 million ether are locked into 2.0 deposit contract addressing, according to Dune Analytics.
- OKLink has built its own database of addresses, which are classified into categories like centralized exchanges, decentralized exchanges, miners and pools based on their behavior, Wang said.