Ethereum Struggles to Find Momentum as Revenue Falls to May 2020 Levels
Ethereum is currently under pressure at spot rates, struggling to find momentum and staying below $2,400. The daily chart indicates a steady sell-off, with the zone between $2,400 and $2,800 proving to be a strong liquidation region.
Ethereum Revenue Falls to May 2020 Levels
Despite the price action, observers note a notable decline in revenue accompanying the sell-off. At press time, the daily revenue generated by the smart contracts platform has dropped to May 2020 levels.
“Revenue” refers to fees paid to validators whenever they approve a transaction or execute smart contracts on the chain. While this decline is a concern, some analysts remain optimistic, saying Ethereum’s future, despite revenue challenges, is bright.
Why Analysts Are Optimistic About Ethereum’s Future
This confidence stems from various developments. Top of the list is the reduction in gas fees on Ethereum, which have become less burdensome over the years. Several implementations have been made to make mainnet transactions cheaper.
Following the congestion during the last bull run in 2020-2021, which pushed gas fees to record highs, Ethereum developers pushed for layer-2 solutions. Platforms like Arbitrum, OP Mainnet, and Base now command billions in total value locked (TVL), according to L2Beat data, and gaining users’ trust.
The Scaling Success and Continuous Building
The rapid adoption of Ethereum layer-2 solutions to reduce the load on the base layer could explain the shrinking fees. Moreover, the Dencun upgrade has further slashed layer-2 gas fees, making these platforms even cheaper.
This success Ethereum has had on matters of scalability is a yardstick for its promising future. Before layer-2s, Ethereum struggled to maintain users as most couldn’t afford the high gas fees, forcing them to alternatives like Solana, Tron, and Avalanche.
The Future of Ethereum: Continuous Building and Refinement
The platform is also building and refining its technology. After the transition to proof-of-stake after The Merge, the immediate objective is to scale on-chain. Vitalik Buterin, the co-founder of Ethereum, has outlined a phased approach to achieve this, starting with Purge to Splurge, and ultimately implementing Sharding, which will allow the platform to process millions of transactions every second without off-chain methods.
Conclusion
Ethereum’s future remains bright despite current challenges. The rapid adoption of layer-2 solutions, reduction in gas fees, and continuous building and refinement of the platform’s technology are all promising signs. As the platform continues to scale and become more user-friendly, its potential for growth and adoption remains vast.
FAQs
Q: What is the current price of Ethereum?
A: As of September 12, Ethereum is struggling to find momentum and is staying below $2,400.
Q: Why is Ethereum’s revenue falling?
A: According to observers, Ethereum’s daily revenue has dropped to May 2020 levels, accompanying the sell-off in price.
Q: Why are analysts optimistic about Ethereum’s future?
A: Despite revenue challenges, analysts are optimistic about Ethereum’s future due to the reduction in gas fees, adoption of layer-2 solutions, and continuous building and refinement of the platform’s technology.
Q: What is the purpose of Ethereum’s layer-2 solutions?
A: Ethereum’s layer-2 solutions aim to reduce the load on the base layer by routing transactions off-chain, making the platform more scalable and user-friendly.
Q: What is the plan for Ethereum’s future scalability?
A: Vitalik Buterin has outlined a phased approach to achieve scalability, starting with Purge to Splurge, and ultimately implementing Sharding, which will allow the platform to process millions of transactions every second without off-chain methods.
