Ethereum (ETH) has seen a surge in on-chain activity this year, with mainnet transaction fees dropping significantly. According to Token Terminal data, Ethereum revenue has plummeted by 99% since March, hitting one of its lowest levels in history. This revenue is derived from transaction fees on Ethereum’s main blockchain.
At the same time, on-chain swaps on Ethereum have reached new all-time highs in 2024, as reported by L2Beat analytics. Ryan Watkins, co-founder of Syncracy Capital, sees these developments as bullish for Ethereum’s blockchain and decentralized finance sector.
The decline in Ethereum’s mainnet fees can be attributed to the Dencun upgrade implemented in March. This upgrade introduced blobs and proto-danksharding technology to Ethereum, enabling layer-2 networks to handle more data and transactions. As a result, transaction costs on Ethereum and its layer-2 networks became more affordable, leading to a decrease in revenue on the mainnet.
Despite the drop in fees, Ethereum has witnessed a surge in activity as users are incentivized to utilize the blockchain more than ever before. High gas fees were a common concern for Ethereum users prior to the Dencun upgrade, often making the chain unusable during periods of high activity. The implementation of Dencun has alleviated these issues, making Ethereum more accessible and cost-effective for users.
Additionally, Ethereum has garnered attention from Wall Street investors, following the approval of spot Ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission in July. By the end of August, over $2 billion worth of spot Ether ETFs had been traded. The impact of these ETFs on Ethereum’s ecosystem and ethos remains a topic of debate within the community.
In conclusion, Ethereum’s on-chain activity reaching new highs while fees are down is seen as a positive sign for the blockchain’s growth and adoption. The decrease in transaction costs has made Ethereum more user-friendly and attractive to a wider range of users, while also attracting institutional interest through the introduction of spot Ether ETFs. The future of Ethereum as a leading blockchain platform looks promising as it continues to evolve and expand its ecosystem.