The DeFi Report analyzes Ethereum's financial performance for Q3 2024, including fee reduction and Layer 2 growth.
Ethereum's Fee Reduction
Ethereum network collected $261 million in fees in Q3 2024, down 47% from the previous quarter. This is the lowest fee level since Q4 2020.
Factors Influencing Fee Decline
DeFi Report experts attribute the fee reduction to the growth of Layer 2 solutions, the introduction of EIP 4844, and a decrease in new crypto users. It also noted a 14% drop in Total Value Locked (TVL), despite a 133% increase year-over-year.
Consequences and Prospects
The release of Uniswap Labs' Layer 2 solution, Unichain, may lead to further losses for Ethereum. Michael Nadeau, the founder of DeFi Report, suggested that Ethereum validators could utilize the situation to boost transactions and token burning to drive demand and increase profit. He noted that there might be a temporary decline in L1 validator revenues until new market solutions emerge.
The reduction in fees and Layer 2 activity present new challenges and opportunities for Ethereum and its validators.