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Macro economist claims "No growth in actual usage of cryptocurrencies in four years", sparking criticism from industry insiders.

2022/7/20

Soundwise founder Natasha Che has been sharing her insights on cryptocurrency and Web3 on social media, covering topics such as valuation methodology, macro perspectives, and the impact of cryptographic technology on the future economy. However, on July 20th, Natasha stated that "since 2019, the actual usage of cryptocurrencies has hardly increased." This view sparked responses and criticisms from KOLs including the CEO of Nansen, the CEO of Crypto Quant, a Coinbase Cloud OG protocol expert, and a partner at Dragonfly Capital.

This article is authorized to be reprinted from BlockBeats, original article here.

Natasha first used a chart to show that the actual global transaction volume of cryptocurrencies has fallen to the level of early 2019, but the market value remains high. Based on this, she drew this controversial conclusion - that since 2019, the actual usage of cryptocurrencies has hardly increased.

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Later, she released a second chart, believing that the transaction volume also confirms this conclusion. There has been no real growth after a complete market cycle, and most of the spikes in between are primarily speculative activities.

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"What is the 'Actual Trading Volume'?"

Natasha emphasized the term "Actual Trading Volume" because she has reduced the trading volume based on the Crypto Price Index to eliminate the impact of price appreciation effects. This self-created "Actual Trading Volume" is actually at the core of this debate.

Nansen CEO Alex Svanevik responded with a succinct "This is absolutely wrong," believing that unless "Actual Trading Volume" means something very specific. CryptoQuant CEO Ki Young Ju believes the only reasonable explanation is that "Actual Trading Volume" only includes EOA (Externally Owned Account) transfer transactions, excluding transactions from smart contracts.

What exactly is this "Actual Trading Volume"? Natasha finally clarified that Chainalysis' database only measures Token transfer transactions and does not consider smart contract calls. Coinbase Cloud OG protocol expert Viktor Bunin believes that if smart contracts are not included, the data lacks all ERC20 tokens (including Stablecoins like USDC), ERC721 NFTs, and applications. However, these are the most commonly used and fastest-growing areas in crypto. Natasha responded that Token transfer transactions here also include ERC20 Tokens (meaning that the data in Natasha's first chart also includes transactions involving Stablecoins).

Natasha claims there is reason behind this statistic: "Yes, the latter (smart contracts) have grown a lot in recent cycles. But if crypto adoption is widespread, you would expect Token transfer transactions to increase over time."

Of course, some crypto KOLs have questioned Natasha Che's reliability on the chart data itself. Viktor Bunin claims that none of Natasha's chart has passed the "Sniff Test". Dragonfly Capital partner Tom Schmidt believes that Stablecoin transactions on Ethereum alone can reach $20 billion per day, and the data in Natasha's first chart may only calculate the Gas spent on Stablecoin transfers, not including the value of Stablecoins in these transfers.

Why such Strong Reactions from KOLs?

Natasha Che is indignant about the situation. Originally, she posted the chart to point out that "after the bull market ends, the sharp drop in crypto trading volume serves as a reminder that current crypto 'adoption' is still driven by speculation. "I don't know why everyone is so cautious about this?"

In the eyes of KOLs, Natasha denies some of the most important innovations in the crypto space in recent years. CryptoQuant CEO Ki Young Ju points out that she dismisses DeFi/NFT/GameFi and other Web3 innovations, which mean nothing to her. However, as the ecosystem develops, most transactions will naturally shift from Token transfers to smart contract calls.

Furthermore, Ki Young Ju finds it absurd to measure crypto adoption with P2P payments. Ignoring smart contract transactions makes no sense unless all cryptocurrencies are only suitable for P2P payments. Crypto adoption cannot be explained solely by EOA transfer transactions.

Natasha Che's Past Perspectives

As the discussion heats up, crypto KOLs gradually shift their focus from Natasha Che's viewpoints to her as a person. Some feel that Natasha Che has always been unreliable, pointing to an article she released in December 2021 titled "Why I'm Bearish on Ethereum."

Some believe that the core premise of Natasha's article is that Layer 2 solutions like Arbitrum and Optimism will take away the vitality of Ethereum's Layer 1. However, solutions like Arbitrum and Optimism have been launched for about a year. The data shows that despite the growth of Layer 2, Ethereum still operates at a speed of 1 to 1.2 million transactions per day (far exceeding Layer 2).

Additionally, Ethereum's daily fees are still far higher than the low point in 2021, and the growth of Layer 2 may actually increase the attractiveness of Ethereum's block space. It seems that Layer 2 attracts incremental transactions rather than taking transactions away from Layer 1.

Natasha also believes that whether institutions or individuals are involved in cryptocurrencies for returns rather than security, and that large-cap stocks are not necessarily "safer." The chart in her article indicates that LUNA has a higher return/risk ratio. Well... LUNA rug pulled in May this year.

Finally, Natasha's most criticized statement is "with the arrival of Ethereum L2, you don't even need to own ETH within Ethereum's own ecosystem." However, the base currency of Arbitrum and Optimism is ETH, and ETH is still required for transfers and Gas fees.

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