• Ethereum Layer 1 Revenues Fall 99% in 6 Months.
• As a consequence of Dencun upgrades and elevated Layer 2 utilization, exercise is shifting away from Ethereum mainnet.
• Issues have been raised about Ethereum’s sustainability.

Ethereum’s Layer 1 community income has fallen a staggering 99% over the previous six months. In response to information from Token Terminal, the community’s income peaked at $35 million on March 5. Nevertheless, after the Dencun improve, day by day income started to say no, hitting an annual low of $200,000 on September 2.

The decline is linked to the expansion of Ethereum Layer 2 (L2) options and the impression of the Dencun improve, which lowered charges for L2 transactions, altering Ethereum's income construction.

After the improve, transaction exercise shifted from the Ethereum mainnet to the L2 platform, resulting in a rise in day by day transactions and energetic customers on these L2s. This shift had a adverse impression on Ethereum payment revenue.

Moreover, modifications to the community's payment construction might have performed a job within the decline in income. ETH's burn fee initially elevated attributable to larger gasoline charges, rising shortage and inflicting deflation of the token. Nevertheless, the introduction of blobs has lowered the burn fee, probably inflicting inflation.

Market specialists have expressed concern concerning the impression Blob could have on the worth of ETH, with some suggesting changes to charges.

In the meantime, different market commentators imagine that this development may additional strengthen the dominance of L2 networks, which may lead to Ethereum mainnet seeing much less adoption, particularly in consumer-facing functions. They argue that Ethereum dangers experiencing valuation issues if it doesn’t develop a priceless use case on its mainnet.

Bitcoin investor Fred Krueger echoed these considerations, warning that Ethereum may enter a “demise spiral” if income ranges stay low.

Krueger famous that Ethereum's present annual payment income of $73 million shouldn’t be sufficient to assist a market cap of $300 billion, suggesting a extra reasonable valuation could also be nearer to $3 billion.

Krueger emphasised that this income is inadequate to cowl the inflation affecting ETH validators, highlighting the disconnect between Ethereum’s income mannequin and market valuation.

The event has sparked combined reactions from the Ethereum group, with Ethereum validator Ryan Berkmans praising the established order of L1 charges and arguing that the success of L2 has made Ethereum extra accessible.