Originally published on: November 07, 2024
The Ethereum network is gearing up for a significant rebound in revenues as activity on layer-2 (L2) scaling networks continues to rise, leading to a surge in demand for data storage. According to cryptocurrency researchers and onchain data, Ethereum’s network revenues are expected to see a substantial increase in the coming months.
Data from Dune Analytics reveals that Ethereum L2s have been generating three times more transaction data daily on the mainnet in November compared to March. This uptick in transaction data on L2 scaling networks is driving the resurgence in Ethereum’s revenues.
After the network’s March Dencun upgrade, Ethereum’s revenues plummeted by up to 95% as L2 transaction data was migrated to temporary offchain stores known as “blobs” to reduce costs for users. However, recent data from asset manager VanEck suggests that the lack of blob revenues is changing, with L2s like Base, Scroll, and World Chain filling the available capacity.
VanEck’s head of digital asset research, Matthew Sigel, predicts that Ethereum could generate up to $66 billion in annual free cash flow by 2030. This growth is expected to drive the price of Ether as high as $22,000 per token. Sigel highlights the significant value accrual to ETH holders from transaction fees as Ethereum processes an increasing share of global transactions, rivaling networks like Visa.
In addition to transaction fees, Ethereum also implements mechanisms like “burning” a portion of fees and rewarding stakers with new ETH for securing the network. Sigel notes that since its launch in 2015, Ethereum has generated $3 billion in fees denominated in ETH.
Recent developments, such as the 10% price spike of ETH after Donald Trump’s victory in the US presidential elections, suggest a positive trend for Ethereum. The surge in net inflows of $52.3 million into US spot Ether exchange-traded funds signals growing investor interest in ETH.
Looking ahead, competition in data availability protocols intensifies, with alternatives like Celestia, EigenDA, and Avail emerging as contenders against Ethereum.
With Ethereum network fees poised for a rebound fueled by L2 scalability and blob uptick, the future looks bright for ETH and its ecosystem. Stay tuned for more exciting developments in the world of cryptocurrency and decentralized finance. Subscribe to our Finance Redefined newsletter for weekly insights and analysis to help you navigate the rapidly evolving landscape of DeFi.
