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In a recent analysis published by DeFi Report, ethereum network fees generated $261 million in Q3 2024, down 47% from the last quarter. ethereum's Layer 1 fees in Q3 were the lowest the network has seen since Q4 2020.
In “eth-report?utm_source=thedefireport.beehiiv.com&utm_medium=newsletter&utm_campaign=the-eth-report-q3-24&_bhlid=b614f92561e9769265091c24d9470ebf1583bf60″ target=”_blank” rel=”nofollow”>The eth Report: Q3-24”Published on October 16, ethereum (eth) Layer 1 in Q3 2024 proved to be the lowest since 2020. The DeFi Report believes this is due to the emerging growth of Layer 2 networks, the introduction of EIP 4844 and the decline in new cryptocurrency users in the third quarter.
Not only that, the report revealed that ethereum's total value locked fell 14% in the quarter, but increased 133% over the past year. The token itself was down 21% this quarter, and more tokens were issued than were burned on the network.
In their analysis, DeFi Report stated that they predicted the drop in ethereum fees as a result of
the added EIP4844 update, the introduction of the Celestia modular data availability network, as well as the emergence of new, more economical data availability networks.
The launch of Uniswap Labs' new layer 2 solution, Unichain, could also lead to further losses for ethereum.
“The optics don't look very good. Rates have gone down. Inflation has risen. “Uniswap (controls 20% of gas fees for ethereum validators) is now building its own L2,” DeFi Report said in its latest analysis.
DeFi Report founder Michael Nadeau said ethereum validators could take the opportunity to increase transactions and burn more tokens by reducing fees, which could increase demand for tokens and generate more profits for the network.
“We see this as beneficial for app developers, users, and eth validators or holders. That said, as L2s scale, we expect there may be a period where L1 validator revenue falls until the new supply of block space is eventually filled with new use cases hitting the market,” he wrote in eth-report-q3-24&_bhlid=83e6a9db89c9f080afd8051239dc334239c66adb” target=”_blank” rel=”nofollow”>The ethereum Investment Framework.
Earlier this week, Nadeau commented in an x post that ethereum validators and token holders could lose around $368 million in settlement fees paid by Uniswap with the launch of Unichain. Instead, the funds will go to Uniswap Labs and possibly Uniswap token holders.
eth token holders could also suffer losses as the protocol burns less eth and the allocation of settlement fees goes to UNI token holders.
