According to Token Terminal data, Ethereum protocol revenues are down a whopping 86% in the third quarter, alongside the falling price of the token itself.
Declining Ethereum network revenues
At its peak last year, revenues generated in November were as high as $1.6 billion. However, the amounts have dropped significantly in previous months. They stood at $82.1, $65.6 and $52.4 million in July, June, and September this year respectively. These sums cannot be considered as revenue for Ethereum's founders and administrators, as there is no centralized company as such. Instead, these revenues were mainly due to the miners and validators of the network, who were de facto responsible for its operation.
Will this have an impact on the price of ETH?
Revenue from the Ethereum protocol comes primarily from fees charged by the ETH protocol (gas fees). These depend on the demand for Ethereum, which ultimately translates into the token price and fees. Therefore, a strong correlation between the ETH price and revenue is apparent. When the price of the coin fell this year, so did revenues.
Ethereum's protocol revenue may remain low for a long time because the move to Proof-of-Stake (PoS) blockchain has reduced the energy consumption and thus the cost, which for the other side of the transaction is the protocol revenue.
After merge, the token may no longer generate as much revenue as it once did through the current lack of cryptocurrency digging, which absorbed a large part of the cost. In theory, increased demand even with PoS blockchain could translate into increased commissions and network revenue, but it would have to require a gigantic influx of buyers.
Ethereum Price, daily candles
Source: Conotoxia MT5
Ethereum has been moving in a sideways trend for almost three weeks. Today at 16:00 GMT+3 ETH is losing around 0.3%.
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Rafał Tworkowski, Junior Market Analyst, Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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