IntoTheBlock stated that as speculative activities disappear and users migrate to Layer 2, the cost revenue of Ethereum networks has dropped to its lowest level since April 2020.October 14, 2023 2:24 amUpdated on October 14, 2023 at 2:27 amEthereum network fees (IntoTheBlock)Cryptographic data analysis company IntoTheBlock stated in a report that Ethereum may enter a new system dominated by low network income generated by fees, testing its deflationary supply narrative for its native token Ethereum (ETH)
IntoTheBlock stated that as speculative activities disappear and users migrate to Layer 2, the cost revenue of Ethereum networks has dropped to its lowest level since April 2020.
October 14, 2023 2:24 am
Updated on October 14, 2023 at 2:27 am
Ethereum network fees (IntoTheBlock)
Cryptographic data analysis company IntoTheBlock stated in a report that Ethereum may enter a new system dominated by low network income generated by fees, testing its deflationary supply narrative for its native token Ethereum (ETH).
According to data from IntoTheBlock, the network fee revenue of Ethereum blockchain has dropped to its lowest level since April 2020, a 90% decrease from its peak in May this year.
In the bull market of the past few years, Ethereum users have complained about high transaction costs (also known as gasoline fees), and due to the increase in irreplaceable token (NFT) trading and decentralized financial (DeFi) revenue agricultural activities, the network is prone to congestion. With cryptocurrency prices plummeting, NFT demand plummeting, and DeFi activity plummeting, those days are gone forever.
The report points out that the surge in Layer2 developed to help Ethereum expand and increase capacity also helps reduce costs. Although this development is positive for Ethereum users as they can execute transactions more cheaply than before, it maintains inflation by burning fewer tokens than newly issued tokens, thereby affecting Ethereum's supply.
Lucas Outumuro, director of research at IntoTheBlock, said: "The decline in costs is testing ETH's' super robust currency 'theory
Data shows that in the past 30 days, due to low blockchain activity, the supply of ETH tokens has increased by 33500 ETH, valued at approximately $52 million.
Outumuro stated that as speculative activities dry up and users continue to migrate to the second tier, network fee income may remain at a relatively low level. For example, he stated in his report that NFT transactions resulted in the majority of tokens destroyed in 2021 and early 2022, but only accounted for 8% last week.
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