Ethereum is currently under heavy pressure at spot rates. As of September 12, the second-most valuable coin is struggling to gain momentum and remains below $2,400. The daily chart shows that ETH is being continuously sold off, with the area between $2,400 and $2,800 proving to be a strong liquidation zone.
Ethereum Revenue Drops to May 2020 Levels
In addition to value, another factor is standing out. According to experts, not only is the price of ETH falling, but revenue is also recording a significant decline. At the time of writing, the daily revenue generated by the smart contract platform is at the level of May 2020.
To clarify, “revenue” refers to the fees paid to validators when they approve transactions or execute on-chain smart contracts. While this is an issue, some analysts remain optimistic, saying that Ethereum’s future, despite its revenue challenges, is bright.
This belief stems from a number of developments. At the top of the list is the consistent belief that gas fees on Ethereum have come down and are not as bad as many people think. Over the years, many improvements have been made to make transactions on the mainnet cheaper.
After congestion during the late 2020 to 2021 bull run caused gas fees to reach record levels, Ethereum developers have been pushing layer-2 solutions. Platforms like Arbitrum, OP Mainnet, and Base now hold billions in total value locked (TVL), according to data from L2Beat, and are increasingly gaining user trust.
Most importantly, even though these solutions move transactions off-chain, there have been no major hacks that have discredited participants and raised questions about their security.
Thanks to this popularity, leading tech companies and cryptocurrency exchanges like Sony and Coinbase have been active. Coinbase has supported Base, while Sony is planning to launch its layer-2, Soneium.
Success in Expansion, Construction and Continuous Improvement
The rapid adoption of Ethereum layer-2 solutions to reduce the load on the underlying layer may explain the reduction in gas fees. Furthermore, the Dencun upgrade has further reduced layer-2 gas fees, making these platforms even cheaper.
Ethereum’s success in scaling has led many observers to believe that the future of the platform is very promising. Before layer-2, Ethereum struggled to retain users as most could not afford the high gas fees, forcing them to look to other options like Solana, Tron, and Avalanche.
As a measure of success, meme coins have been doing well on Ethereum despite the dip on Solana and the move to Tron. According to Coingecko, some of the most valuable meme coins, like Pepe and Floki, are on Ethereum, while others like Brett are on Base – part of that ecosystem.
The platform is also under construction. After successfully transitioning to proof-of-stake after The Merge, the immediate goal is on-chain scaling.
Vitalik Buterin, co-founder of Ethereum, said that this will be done in stages, from Purge to Splurge. Eventually, the platform will implement Sharding, which will allow for millions of transactions per second without the need for off-chain methods.
