When ethereum (eth) surpassed $2,000 on November 9, Erik Smith, chief investment officer at 401 Capital, observed that the platform’s average daily revenue increased to the highest level in four months.
According to the data, ethereum generated $10 million in daily revenue, extending gains recorded the previous day and taking the metric to the highest point since July.
ethereum Prices Above $2,000, Revenue Surge in November
For now, eth prices remain subdued but are trading around November 9 highs and remain within a bullish formation supported by decent trading volumes. Prices are still trending above the $2,000 psychological support, a critical reaction level.
A look at ethereum‘s candle layout on the daily chart shows that while there is a notable increase in daily revenue, prices are still below the July 2023 highs. The coin then skyrocketed to $2,100 before retreating as momentum sparked by broader cryptocurrency expectation of a bitcoin Exchange Traded Fund (ETF) approval faded. However, prices have since recovered dramatically, rising approximately 40% from the October lows and overcoming the weakness recorded on August 17, when the currency plunged 14%.
Data from Token Terminal shows that ethereum‘s daily revenue has increased steadily in the first ten days of November. Looking at trends, average daily revenue has doubled from $5 million in the first five days of the month. Typically, an increase in average daily revenue on a network points to an increase in activity on the chain, either through the implementation of smart contracts or simple transfers, which requires the payment of gas fees.
Improving long-term scalability
It is not immediately evident how widespread adoption of ethereum‘s sidechain and layer 2 scaling solutions will impact network revenue. }
What is clear is that the more protocols that leverage the protocol, implementing multiple solutions, the more revenue the network will generate for validators and participants. Staking rewards are earned in part from transaction fees paid as gas, new issuances, and burned mining extractable value (MEV).
Still, the dollar value of eth minted as income depends on spot rates. If the bullish trend continues, this figure will continue to expand. Still, there could be more demand for the network, which is still struggling to scale up the chain.
ethereum 2.0 aims to solve these challenges in the coming years by increasing overall performance through solutions like Sharding. Sharding will split ethereum into small but interconnected networks called shards. Each shard will independently process each set of transactions and maintain its state, allowing the mainnet to scale.
Featured image from Canva, TradingView chart
