Ethereum fees set to rise with increase in L2, DeFi activity

Cryptocurrency researchers and on-chain data suggest that Ethereum’s network revenues are on the rise thanks to increased activity on layer-2 (L2) scaling networks. In fact, L2s are now sending three times more transaction data to the mainnet daily compared to March, according to data from Dune Analytics.

After a March upgrade that moved L2 transaction data to temporary off-chain “blobs” to reduce costs for users, Ethereum’s revenues fell by 95%. However, recent data indicates a shift, with popular L2s like Base, Scroll, and World Chain showing signs of increased activity.

VanEck’s head of digital asset research, Matthew Sigel, highlighted this change, noting that the lack of blob revenues had weakened Ethereum fees. He expects Ethereum’s cash flow to reach $66 billion annually by 2030, potentially driving the price of Ether (ETH) tokens to $22,000.

Since its launch in 2015, Ethereum has generated $3 billion in fees, according to Sigel. Apart from transaction fees, Ethereum implements mechanisms like burning a portion of transaction fees and rewarding stakers with new ETH to secure the network.

Following a 10% spike in ETH prices after Donald Trump’s win in the US presidential election, there was a notable increase in net inflows to US spot Ether exchange-traded funds (ETFs). This victory could pave the way for more crypto investment products, including the first staked ETH ETFs, according to Edward Wilson, an analyst at Nansen.

Competing protocols like Celestia, EigenDA, and Avail are also vying for data availability against Ethereum. Keep an eye on these developments as Ethereum’s network continues to evolve.