Ethereum income falls by 75%: Hidden concerns and ecological transformation struggle amid bull run celebrations

Author: David, Deep Tide TechFlow

In the past few days, the hottest debate on crypto Twitter in the English-speaking community has been about Ethereum income.

On September 7, AJC, the enterprise research manager at Messari, posted a message pointing out that the Ethereum network is sinking into "death." He stated that although the ETH price reached a new high in August, Ethereum's revenue for the month was only $39.2 million.

This data represents a decrease of 75% compared to 157.4 million USD in August 2023, and a decrease of 40% compared to 64.8 million USD in August 2024. At the same time, this is also the fourth lowest monthly revenue level in Ethereum's history since January 2021.

AJC lamented that the fundamentals of Ethereum are collapsing, yet everyone seems only concerned about the rising price of ETH, regardless of whether the network is actually healthy. Two days after this post was made, it has already garnered nearly 380,000 views and close to 300 replies.

Why is there so much attention on discussing the fundamentals of Ethereum now?

The timing is indeed very subtle. ETH is currently at the peak of a bull market, with prices hitting new highs repeatedly, but the underlying network activity and Ethereum's own positioning are quietly changing.

After the Dencun upgrade in 2024, L2s like Base and Arbitrum are thriving, with a significant reduction in main chain transaction fees, leading to a shift of revenue to these scaling layers; after the popularity of the coin-stock play this year, SBET and BMNR are competing to reserve ETH, and mainstream finance and Wall Street are beginning to turn ETH into a tool for increasing financial leverage.

And now, Ethereum itself seems more like a flag of altruism in the style of Lei Feng, waving to respond to market trends and guiding others, but is itself riddled with holes?

The decline in revenue is indeed an undeniable fact, but whether this is a signal of the Ethereum network's own decline is a matter of differing opinions within the community.

Proponents: Income is vital, the alarm has sounded.

The core viewpoint of ACJ and other proponents is actually very simple: revenue is the correct measure for evaluating L1.

Specifically, the income of a chain primarily comes from transaction fees and block space usage fees, which are the core manifestations of users' actual demand for your chain.

As the largest platform in the crypto world, Ethereum's core competitive advantage lies in the "demand for block space": it enables the network to efficiently process smart contracts and decentralized applications, which is more advantageous than Bitcoin's pure value storage, and is also a significant narrative point that distinguishes it from Bitcoin.

But now that income is tending towards zero, it means that the demand for the main chain is shrinking. Even with the flourishing of L2, AJC believes that the entire ecosystem lacks new users to support the usage of so many L2s.

You might ask, why is income linked to the fundamentals of Ethereum?

The logic of the original poster and supporters is that income is received and destroyed in the form of ETH, which directly drives the deflationary mechanism of ETH. If income crashes, the amount destroyed decreases, increasing the supply pressure of Ether, making it difficult to maintain long-term value.

More importantly, during the last bull market cycle, the Ethereum community boasted about the "block space premium" from high on-chain revenues, proving strong network demand. Now the situation has reversed; this is not a coincidence, but a real collapse of demand drivers.

Although somewhat pessimistic, a relatively neutral viewpoint is that the network itself is the asset. Prices can be driven up by speculation in the short term, but detached from the fundamentals, they will eventually return to reality. This pattern has been proven countless times in other crypto infrastructure projects.

From an observer's perspective, AJC's revenue logic does make sense, at least reflecting the hidden dangers under the ETH bull market bubble. However, if other ecological indicators, such as on-chain activity, are overlooked, this viewpoint may be somewhat biased.

The opposition is going all out: Is a decline in income a good thing?

As soon as AJC's viewpoint was released, the comment section instantly turned into a battleground, with opponents firing back fiercely, expressing their disagreement with this recession theory.

Unlike the general E-Guardian, opponents view Ethereum through a larger narrative, and their core counterargument is:

Treating Ethereum as a tech company aimed at maximizing revenue is fundamentally a cognitive categorization error. Ethereum now resembles more of a cryptocurrency, a commodity with inelastic supply, or an emerging economy.

From this qualitative perspective, the decline in revenue is not a problem, but rather a positive signal of successful design, as it better promotes broader user adoption and ecological growth.

Taking David Hoffman, the co-founder of Bankless, as an example, he compares Ethereum to early Singapore or Shenzhen, a paradise conducive to business freedom. In such an environment, the focus should not be on how much tax this city can collect, but rather on whether this city has stimulated infrastructure and economic growth.

Former Wall Street trader and Etherealize founder Vivek Raman stated that Bitcoin has almost no income and does not count as a recession, so why should Ethereum be judged by its income?

Their logic actually stems from the early vision of Ethereum founder Vitalik Buterin, which is that Ethereum is an inelastic supply commodity, with valuation relying on supply and demand dynamics rather than quarterly reports. Too high revenue can easily lead to negative network effects, and charging too much gas can scare away users.

In fact, the viewpoints of these opponents can be traced back to Vitalik's early vision.

In the white paper, Vitalik describes ETH as the "crypto fuel" of the network, which the community often likens to digital oil, with its value depending on supply and demand dynamics rather than quarterly financial reports like a company.

High costs (source of income) have been proven to hinder user adoption, creating a negative feedback loop that the community sees as a counter-network effect.

As a result, the decline in Ethereum mainnet revenue is seen as a good thing to some extent in their eyes.

After the Dencun upgrade in 2024, L2 shifted the burden from the main chain, leading to a decrease in revenue. However, this equates to a lower fee threshold, attracting the general public to engage with DeFi, NFTs, and even institutional-level applications.

In the comments section, Tom Dunleavy, the head of venture capital at Varys Capital, bluntly stated that L1's revenue is a stumbling block for ecological growth.

Ethereum community cycle trader Ryan Berckmans shared data: when the market value of stablecoins is 60% on Ethereum, and it has been highlighted by the US Treasury Secretary, with various on-chain activity indicators improving, what kind of recession is this?

The next crossroads of Ethereum

This debate, while lively, actually touches on a fundamental question: how should we value Ethereum?

From the comments section, most opponents believe that Ethereum is shifting from a busy execution layer to a solid global settlement layer. If you use the logic of tech stocks and try to value it based on income, it seems a bit too rigid.

From the perspective of technology stocks, revenue is clearly the most important factor. If a revenue collapse is truly a signal of weak demand, then the risk of a short-term bull market bubble bursting is significant.

The various rebuttals in the comment section are actually a multi-indicator narrative that emphasizes the ecological health and long-term transformation of Ethereum. The revenue itself is not very important; its valuation comes from the recognition of various parties and the overall reliance of the crypto ecosystem on Ethereum.

The debate may be over, but the story of Ethereum is far from over.

Transitioning from a cryptocurrency technology platform to a global economic entity inevitably comes with growing pains, such as declining revenues and L2 encroaching on market share.

But this transformation may be the necessary path for Ethereum to mature.

Just like the internet evolved from the early days of paid dial-up to the widespread adoption of free broadband, it may seem that the single-user revenue of operators has declined, but the scale of the entire digital economy has achieved exponential growth.

Ethereum is currently at a similar turning point: the decline in mainnet revenue may actually make way for a larger-scale ecological prosperity. The rise of L2 is not about "stealing" the value of Ethereum, but about amplifying Ethereum's strategic value as a settlement layer.

More importantly, this debate itself illustrates Ethereum's unique position in the crypto world—no one would engage in a heated debate over Bitcoin's "declining revenues" because it has long been accepted as digital gold.

The reason Ethereum can provoke such fervent discussions is precisely because it carries a more complex and grander vision.

Ethereum is healthy, and everyone benefits. Who knows if the next bull market turning point will start from here?