Ethereum's layer-1 network has taken a beating. Revenue has plummeted by 99% since March 2024. The Dencun upgrade is the culprit.
Layer-2 solutions are thriving. They're attracting more users and offering lower fees. Token Terminal data confirms this trend.
The Dencun upgrade went live on March 13. It optimized layer-2 transactions. Days before, Ethereum's layer-1 revenue topped $35 million. Then fees began to nosedive.
By August's end, revenue hit rock bottom at $600,000. This shift reveals changing user behavior in the Ethereum ecosystem.
"Blobs" are the game-changer. They allow layer-2 solutions to process transactions with less reliance on layer-1. The result? Dirt-cheap transactions.
Layer-1 revenue has fallen off a cliff. But it's not all doom and gloom. Layer-2 projects are popping up like mushrooms. There are now 74 solutions duking it out.
It's a race to the bottom for transaction fees. Users are laughing all the way to the bank. They're saving a bundle on faster transactions.
Some validators reckon the fee focus is off-base. Ryan Berckmans, a big-shot validator, argues layer-2 success makes Ethereum more accessible. He quips, "Fees are a result of Ethereum being useful, not the goal in itself."
The community's split on this one. Some worry about long-term consequences. The reduced ETH burn rate has flipped the supply from deflationary to inflationary.
This raises eyebrows about ETH's future value. Some reckon blob fee tweaks might be needed to rebalance the scales.
Despite the hubbub, institutional interest is picking up. Coinbase, Circle, and even BlackRock are backing Ethereum. They're building infrastructure for the long haul.
Ethereum fanboy Adriano Feria reckons this institutional support is the real deal. He says speculation might bring a flash in the pan, but it's the big players that'll drive real progress.
Feria's bullish on layer-2 solutions. He sees them unlocking new possibilities and jazzing up the user experience. Giants like Coinbase's Base and Arbitrum are tapping into Ethereum's liquidity. They're proving layer-2 can coexist and thrive alongside layer-1.
The layer-2 boom is hitting Ethereum's layer-1 revenue hard. But it's opening a new chapter for the network. The Dencun upgrade has reshaped the landscape, making transactions cheaper and more accessible.
With institutional interest brewing and users flocking to layer-2 solutions, Ethereum might be on the cusp of its next evolution. It's a bumpy ride, but the destination could be worth it.