Ethereum on track for $1B annual profit as DeFi drives Q1 revenue

Ethereum’s blockchain network is projected to generate approximately $1 billion in annual earnings, following a profitable Q1 with revenues amounting to $365 million. This success is coupled with a substantial increase of 155% compared to the same quarter last year.

According to a report by The DeFI Report’s analyst Michael Nadeau released on April 17, the network is expected to make approximately double its Q4 2023 profit of $123 million in the first quarter of 2024, amounting to around $246 million.

In Q2 2023, Ethereum generated fee income amounting to $1.17 billion, marking a significant jump of 155% compared to the first quarter, and a noteworthy rise of 80% over the previous quarter, all from users processing transactions on the network.

Ethereum on track for $1B annual profit as DeFi drives Q1 revenue

Nadeau explained that the revenue growth was mainly attributed to an uptick in Defi-related network activities during the past quarter.

In the first half of 2024, the number of daily transactions on the blockchain has significantly increased compared to the entire previous year. This figure is approaching the all-time high reached by Ethereum in 2021.

Ethereum on track for $1B annual profit as DeFi drives Q1 revenue

Approximately 1.15 million daily transactions occurred on average in the year 2024. This is a small increase from the 1.05 million transactions per day in the previous year, and slightly below the 1.25 million recorded in 2021.

In the year 2015, Ethereum made its debut, but it wasn’t until 2023 that the platform reported its first profitable year with a revenue of $623 million. Surprisingly, this figure represented a significant decrease from its peak revenue in 2021, which amounted to an impressive $9.9 billion – a difference of approximately 75%.

Nadeau pointed out that the significant decrease, around 80%, in token rewards for validators occurred with the shift to proof-of-stake consensus in September ’22.

He added Ethereum’s fees have grown at a rate of 58% since 2017.

“Crypto will outperform everything else” in the years ahead

Nadeau shared his forecasts for the cryptocurrency market over the next few years, and he firmly believed that crypto would surpass the performance of all other investments.

For the coming years, he anticipated easier access to funds due to a significant amount of US debt coming due for renewal this year, as well as the financial market’s assumption of the Federal Reserve implementing three interest rate reductions in 2021.

“This should provide a tailwind for risk assets such as tech stocks and quality crypto.”

Three key factors – the approval of Bitcoin ETFs in the US, the Bitcoin halving event, and the “innovation cycle” identified by Nadeau – suggest a promising outlook for Bitcoin’s price trend over the next few years.

Bitcoin ETFs can act as an introduction or precursor, making it easier for people to invest in cryptocurrencies. With the upcoming halving on April 20, which historically results in a surge in prices during the following year.

As the “innovation cycle” progresses and becomes more established, Nadeau anticipates that it will attract fresh venture capital investment and reinvigorate consumer enthusiasm for crypto.

The speaker asserted that Bitcoin and Ether (ETH) exhibit a significant correlation – Bitcoin typically leads the way during the initial growth phase of a bull market due to its widespread recognition, while ETH and other alternative coins usually surpass Bitcoin’s gains as the market cycle advances.

“Nadeau pointed out that altcoins significantly outpaced Bitcoin’s gains during the entirety of the previous two market cycles, with impressive rises.”

He believed this would continue but only with altcoins “that have clear product market fit.”

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2024-04-19 10:21