Ethereum Transaction Volume Surpasses Bitcoin: 345 Million On-Chain Settlements in 2020

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Ethereum’s momentum in 2020 was nothing short of transformative. While Bitcoin remained the market leader in terms of price dominance, Ethereum quietly outpaced it in key on-chain activity metrics — most notably with 345 million on-chain settlements, roughly three times the volume of Bitcoin’s network during the same period.

This surge wasn’t accidental. It reflected a year of explosive growth across Ethereum’s ecosystem, driven by the rise of decentralized finance (DeFi), stablecoin adoption, and major infrastructure upgrades. Behind the scenes, Ethereum evolved from a smart contract platform into the foundational layer for a new financial system.

Let’s dive into the data that tells this story — and why Ethereum’s real value may still be ahead.

Ethereum Outperforms Bitcoin with 464% Annual Growth

In 2020, Ethereum (ETH) rose from approximately $130.80** at the start of the year to close near **$737.80, marking an impressive 464.07% increase — significantly outpacing Bitcoin’s 302.81% growth over the same period.

The average annual price of ETH held above $307.50**, peaking at **$751.60 on December 30. The lowest point came during the March market crash, when ETH briefly dipped to $110.60 — a momentary setback amid an otherwise bullish trend.

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Three distinct bullish phases defined ETH’s ascent:

  1. January to early March: Up ~123%, fueled by early optimism and institutional interest.
  2. Late July to early September: Gained ~102%, driven by the DeFi yield farming boom.
  3. November to December: Rose ~92.5%, aligning with broader crypto market euphoria.

Despite strong price movement, volatility remained relatively contained. The average daily volatility was 6.09%, only slightly higher than Bitcoin’s 4.32%. Notably, March saw extreme swings (11.54% monthly volatility), while June and July were remarkably stable (3.75% and 4.00%, respectively).

For investors, this upward trend translated into positive short-term returns. The 30-day holding return turned positive by year-end, rising from -12.8% in January to +25.6% in December — a 38 percentage point improvement. On 46 days, the 30-day return exceeded 50%, with a peak of 85.9%.

Trading volume mirrored this momentum, averaging $14.25 billion daily. Volume spiked notably between February–May and September–December, reflecting synchronized demand across major digital assets.

User Growth and On-Chain Activity Soar

Ethereum’s fundamentals strengthened dramatically in 2020, laying the groundwork for long-term value accrual.

Rising Adoption: Active Addresses Up 23%

The network averaged 438,100 daily active addresses — a 23.38% increase compared to 2018’s bull market levels. By Q4, average daily activity reached 526,400, with November peaking at 554,600. July, August, October, and December also surpassed 500,000 active addresses per day.

This surge correlates directly with the DeFi explosion. As protocols like Uniswap, Aave, and Compound gained traction, user engagement followed.

Moreover, unique contract addresses grew from 8,413 at the start of the year to 13,094 by December — a 55.64% increase. That’s nearly 13 new smart contracts created daily, indicating sustained developer momentum.

Record Settlement Volume: 345 Million Transactions

Ethereum processed approximately 345 million on-chain transactions in 2020 — about three times Bitcoin’s volume and a 41.98% increase from 2019.

Monthly averages hit 28.73 million, with August being the most active at 36.68 million transactions.

Quarterly trends reveal a clear pattern:

This aligns perfectly with the DeFi boom and rising ETH price — forming a powerful feedback loop where increased usage drives value, which in turn attracts more users.

In value terms, Ethereum settled 1.141 billion ETH (~$402.2 billion USD) across the year. While this is about 1/16th of Bitcoin’s dollar-denominated settlement volume, it's important to note that Ethereum settled twice as many native coins as Bitcoin did BTC — highlighting its role as a settlement layer for diverse applications beyond simple transfers.

Gas Fees Skyrocket: Network Congestion Hits New Highs

With rising demand came rising costs.

Average gas prices jumped from 11.7 Gwei in January to 99.5 Gwei by year-end — an increase of 750.43%. The average gas price across 2020 was 60.6 Gwei, with 54 days exceeding 100 Gwei and 14 days surpassing 200 Gwei.

Key spikes:

These anomalies were linked to high-profile transactions and early DeFi congestion events.

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As gas prices climbed, so did transaction fees:

Total fees collected in 2020: $631 million

For context, Bitcoin miners earned about $232 million less in fees — making Ethereum’s fee market nearly 2.72x larger.

This gap reflects a fundamental difference: Ethereum serves as a platform for complex applications (DeFi, NFTs, stablecoins), generating far more transactional demand than Bitcoin’s primarily transfer-based use case.

High fees are not just a cost — they’re a signal of network demand and economic activity.

Mining Economics: $2.69 Billion in Total Rewards

Ethereum’s mining ecosystem remained robust throughout 2020.

By December 31, ETH’s total supply reached approximately 114 million, up 4.96 million ETH (4.55%) from年初 — a slower growth rate compared to previous years (7.66% in 2018, 10.51% in 2017), reflecting gradual disinflation.

Block rewards totaled around $2.059 billion**, with December alone contributing **$362 million — the highest monthly total.

When combined with transaction fees ($631 million), total miner revenue reached **$2.69 billion** for the year.

For comparison:

Still, Ethereum miners benefited from higher fee dependency:

In Q3 alone, fees made up nearly 27% of miner revenue, peaking at 60.53% on June 11 — again showing how DeFi-driven demand is reshaping incentive structures.

Ethereum 2.0: Beacon Chain Launches Successfully

One of the most critical developments in 2020 was the launch of Ethereum 2.0 Phase 0 on December 1, 2020, introducing the Beacon Chain.

Key milestones:

This marked a major step toward scalability and sustainability through proof-of-stake (PoS).

Future upgrades — including shard chains and Layer 2 rollups — aim to alleviate congestion and reduce fees long-term.

Frequently Asked Questions (FAQ)

Q: Why did Ethereum process more transactions than Bitcoin but settle less dollar value?
A: Ethereum handles complex smart contract interactions (DeFi trades, token swaps), which generate more transactions but often involve smaller individual values compared to large BTC transfers used for macro settlements.

Q: Does high gas mean Ethereum is failing?
A: Not necessarily. High gas reflects strong demand. While UX challenges exist, they’re driving innovation in Layer 2 scaling solutions like Optimism and Arbitrum.

Q: How does DeFi impact Ethereum’s fundamentals?
A: DeFi increases real-world utility, driving transaction volume, address growth, and fee generation — all signs of a thriving ecosystem.

Q: Is Ethereum still inflationary?
A: Yes, but slowly. Annual supply growth dropped to 4.55% in 2020 and will decline further post-EIP-1559 and full Eth2 transition.

Q: Can Ethereum sustain high transaction volumes?
A: Short-term congestion is expected, but Layer 2 solutions and sharding are designed to scale Ethereum to thousands of TPS in coming years.

Q: What does “settlement” mean in blockchain context?
A: Settlement refers to finalizing transactions on-chain. High settlement counts indicate trust-minimized clearing of value or data within the network.

Final Outlook: Strong Fundamentals Set Stage for Future Growth

Despite not reaching new all-time highs in 2020, Ethereum laid an undeniable foundation for future price discovery.

Key takeaways:

Market consensus lagged behind technical progress — creating potential for future revaluation.

As adoption continues into 2025 and beyond, Ethereum’s role as the backbone of Web3 remains unchallenged.

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Core Keywords: Ethereum, DeFi, blockchain, on-chain data, smart contracts, gas fees, transaction volume, Ethereum 2.0