Ethereum Network Hashrate Hits 20-Month High as DeFi Tokens Rally

New data from glassnode and Etherscan show Ethereum's hashrate has risen to a 20-month high and this has led some optimistic traders to suggest Ether price will continue to rise to new highs in 2020.The explosive increase in Ethereum's hashrate appears to be heavily influenced by the rapidly growing Decentralized Finance sector and at the time of writing is hovers around 201,000,000 GH/s, a level not seen since 2018.Ethereum network hashrate rises to 2018 levels.

In recent weeks, demand for Ether has increased noticeably and since mid-June, an increasing number of users started to utilize DeFi platforms, leading the Ethereum network to become clogged.

Is a higher hashrate good or bad for Ethereum?The surging hashrate, Ether price, and rising fees signal that the user activity on the Ethereum blockchain is increasing.

Although the momentum of Ethereum has primarily been fueled by DeFi, the data show the fundamentals of Ethereum have strengthened.

The hashrate of the Ethereum blockchain network has also been increasing because of rising miner revenues from fees.

"Miner revenue from fees on Ethereum has skyrocketed in the past two months, reaching an all-time high of around 18%. Conversely, this has brought the Fee Ratio Multiple to lows never seen before on Ethereum. Created by Teo Leibowitz , the Fee Ratio Multiple is defined as the ratio between the total miner revenue and transaction fees. FRM indicates how secure a chain is once block rewards disappear."

Ether fees outpace BitcoinIn recent weeks, the craze around Uniswap and new DeFi protocols, such as Yam Finance, led fees on Ethereum to outpace Bitcoin.

Some critics may justifiably argue that higher fees on the Ethereum network negatively affect users and complicate the user experience.

An alternate interpretation suggests that rising fees signal that user activity on the network is climbing and the hashrate is rising as a result.

As long as Ethereum remains a proof-of-work blockchain network, the hashrate serves as an important metric for blockchain security.