Ethereum Revenue Falls to May 2020 Levels, But Analysts Are Buoyant About the Future

Ethereum is under pressure at spot rates. As of September 12, the second most valuable coin struggled for momentum and stuck below $2,400.

Ethereum price is under pressure at spot prices. As of September 12, the second most valuable coin struggled to gain momentum and remained below $2,400. The daily chart shows that ETH is constantly being sold and the area between $2,400 and $2,800 is a strong liquidation area.

Ethereum Revenue Drops to May 2020 Levels

Beyond the price movement, something reveals itself. According to observers, not only is the ETH price falling, but there is also a notable decrease in the revenues accompanying the sales. At press time, daily revenue generated by the smart contract platform is at May 2020 levels.

To clarify, “revenue” refers to the fees validators pay when they confirm a transaction or execute smart contracts on-chain. While this is a concern, some analysts are optimistic, saying Ethereum's future is bright despite its revenue challenges.

This trust stems from various developments. At the top of the list is the insistence that gas fees on Ethereum are low and not as bad as many think. Over the years, there have been various implementations to make mainnet operations cheaper.

After the congestion during the last bull run, which lasted from 2020 to 2021 and pushed gas fees to record levels, Ethereum developers turned to layer 2 solutions. Platforms such as Arbitrum, OP Mainnet and Base now have billions of dollars in total value locked (TVL) and are gaining the trust of users, judging by L2Beat data.

Most importantly, although these solutions route transactions off-chain, there have been no large-scale attacks that prevent participation or question their security.

Due to their popularity, top technology companies and crypto exchanges such as Sony and Coinbase have become active. Coinbase already supports Base and Sony plans to release a layer 2, Soneium.

Scaling Success, Continuous Building and Improvement

The rapid adoption of Ethereum layer 2 solutions to reduce the load on the base layer may explain the falling fees. Additionally, the Dencun upgrade has further reduced tier 2 gas fees, making these platforms even cheaper.

It is Ethereum's success in scalability that observers see as promising for the future of the platform. Before layers 2, Ethereum struggled to retain users as many could not afford high gas fees, pushing them towards alternatives like Solana, Tron, and Avalanche.

As a measure of success, meme coin activity on Ethereum remains good, although it has decreased on Solana and shifted to Tron. According to Coingecko, some of the most valuable meme coins, Pepe and Floki, reside on Ethereum, while others, such as Brett, reside in the ecosystem of the network that is part of Base.

The platform is being built at the same time. Following the move to proof-of-work after The Merge, the primary goal is on-chain scaling.

Ethereum co-founder Vitalik Buterin said this will be achieved in phases, from Purge to Splurge. Eventually, the platform will implement Sharding, allowing it to process millions of transactions per second without off-chain methods.

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