Ethereum fees poised for rebound amid L2, blob uptick

As a seasoned analyst with a decade of experience in the cryptocurrency market, I have seen my fair share of ups and downs, bull runs, and bear markets. The recent surge in activity on Ethereum’s layer 2 scaling networks (L2s) has caught my attention, and I am optimistic about its potential impact on Ethereum’s network revenues.


Based on insights from cryptocurrency analysts and data from the blockchain, it’s anticipated that Ethereum’s (ETH) network earnings will recover due to heightened activity on layer 2 scaling networks (L2s), which is boosting the need for data storage.

Since November, Ethereum L2s (Layer 2 solutions) have consistently sent over three times the daily transaction data to the main network compared to what was recorded in March, as per data gathered by Dune Analytics.

As an analyst, I’ve observed a significant decrease – up to 95% – in Ethereum’s revenues following the network’s March Dencun upgrade. This decline can be attributed to the migration of L2 transaction data to temporary off-chain storage facilities known as “blobs”. The primary goal of this move was to reduce costs for users, as reported by VanEck, a renowned asset management firm.

In my analysis posted on the X platform on November 1st, I pointed out that the high transaction fees on the Ethereum network were primarily due to a shortage in Blob revenue generation. This is because second-layer solutions have yet to fully utilize their available capacity.

According to Sigel, there’s a hint that things might be shifting, largely due to the influence of Base, Scroll, and World Chain – these being well-known Layer 2 solutions.

Ethereum fees poised for rebound amid L2, blob uptick

Related: Trump win could fast-track first staked Ether ETF — Nansen analyst

By September, Sigel forecasted that Ethereum could potentially yield around $66 billion in yearly free cash flow by the year 2030. This anticipated growth might push the market value of an ETH token up to $22,000.

His estimate reflects anticipated value accrual to ETH holders from transaction fees as Ethereum processes a growing portion of the world’s transactions. 

Last year, Ethereum handled around four trillion dollars in settlement value and an additional five trillion dollars in stablecoin transactions every year. This volume surpasses that of PayPal and is starting to rival networks similar to Visa, according to Sigel.

As an analyst, I’ve observed a significant financial milestone with Ethereum since its inception in 2015: it has accumulated approximately $3 billion in transaction fees, all measured in Ether (ETH).

Alternative ways for ETH value accumulation involve “destroying” a certain amount of transaction fees by permanently taking them out of circulation, and releasing new ETH as rewards for validators, who lock up their ETH as collateral to maintain the network’s stability.

Ethereum fees poised for rebound amid L2, blob uptick

On November 6th, Ethereum (ETH) prices surged by 10% following the victory of pro-cryptocurrency candidate Donald Trump in the U.S. presidential election.

Over the past six weeks, there has been a significant increase in investments into U.S. spot Ether exchange-traded funds (ETFs), with a total of $52.3 million being poured in – the largest inflow since then.

The triumph of Donald Trump in the U.S. Presidential election might open doors for an influx of cryptocurrency investment opportunities within American markets, potentially leading to the introduction of the initial Staked Ethereum Exchange Traded Funds (ETFs), as per Edward Wilson’s analysis at Nansen.

There are several other systems vying with Ethereum in the area of data accessibility. These contenders include Celestia, EigenDA, Avail, as well as a few others.

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2024-11-07 21:51