The biggest Ethereum wallets are smart contracts instead of exchange or user accounts—a sign of adoption and activity.
Wrapped Ethereum leads the charts
Two of the largest Ethereum wallets are smart contracts, data from various sources shows. The top address is a “Wrapped” ETH wallet, while the next is the Ethereum 2.0 deposit wallet.
“The top 2 ETH addresses are now smart contracts: Wrapped Ether and Ethereum 2.0 Deposit”, said Nansen CEO Alex Svavenik in a tweet. He added that the deposit wallet flipped crypto exchange Binance’s largest ETH wallet only a few weeks ago.
Wrapped Ethereum, or WETH, is the ERC20 (or other token standards) tradable version of ETH. WETH can be created by sending ETH to a smart contract which in turn issues the WETH at a 1:1 ratio.
Data shows over 5.9 million ETH (≈$11 billion) is locked up in a Wrapped ETH contract. This means over 5.9 million WETH are now in circulation for other uses, such as yield farming, trading, and/or as collateral to earn interest.
The ETH 2.0 deposit contract, on the other hand, consists of over 3.1 million ETH (≈$6.1 billion). This is part of the network’s upcoming move to a proof of stake consensus design from its current proof of work design. The former would see “stakers” validate and mine new blocks on the network, based on the amount of ETH they hold.
As per tracking site Dune Analytics, the locked up ETH in the deposit contract belongs to over 5,420 unique depositors. 106,304 of those came from a single address, and a total of 64,846 transactions were made to the ETH 2.0 deposit contract.
WETH but why?
Wrapped Ethereum, or WETH, is the ERC20 (or other token standards) tradable version of ETH. WETH can be created by sending ether to a smart contract where the ether is placed on hold, in turn receiving the WETH ERC-20 token at a 1:1 ratio. This WETH can afterward be sent back into the same smart contract to be “unwrapped” or redeemed back for the original ether at a 1:1 ratio.
This required as, surprisingly, ETH is not an ERC20 compliant token. The Ethereum network was created in 2016 while ERC20 tokens were introduced much later, meaning it cannot be exchanged for other ERC20 tokens without a centralized custodian. WETH avoids this and allows for the seamless exchange between ETH and ERC-20 tokens in a decentralized manner.
Meanwhile, even as the top addresses are smart contracts, they do not hold the most ETH and Ethereum assets overall. That accolade goes to crypto exchanges Coinbase and Binance, with holdings of over $22 billion and $20.5 billion worth of ETH respectively.