ETH staking revenues fell by 42% in six months

What’s new? Revenues of staking participants in the Ethereum network have been showing a downward trend for the last six months. In September, the figure was $174 million, down by 42% from the March peak of $247 million. This reflects a decline in network activity. In addition, the blockchain’s revenue from transaction fees totaled $35,5 million last month, well below staking rewards.

The Block’s data

What else is known? In August, Kaiko analysts reported that Ethereum’s gas value had fallen to a five-year low. The main reason was the Dencun hardfork, which reduced fees on Layer 2 (L2) networks by 90%, reducing the popularity of the underlying blockchain.

Despite the drop in revenue, the number of validators continues to increase. It has grown by 30% over the past year to 1,09 million, indicating growing participation in network security and users’ faith in Ethereum’s long-term prospects.

Additionally, earlier this week, Ethereum co-founder Vitalik Buterin proposed lowering the threshold for those wishing to join the network as a validator. Currently, individual users must stake 32 native ETH tokens to do so, which is more than $83 000.

The developer believes that the threshold should be lowered to 1 ETH to create a more extensive network of validators independent of each other and to strengthen the decentralization of the blockchain.

In September 2022, The Merge hardfork was activated, as a result of which Ethereum changed its Proof of Work (PoW) consensus algorithm to Proof of Stake (PoS). ETH switched to a deflationary model, now ETH paid as fees are burned, curbing the growth of the asset’s supply.

From then until April 2024, the network managed to maintain a burn rate of 0,06%, resulting in 861 000 ETH being removed from circulation annually.

The March Dencun hardfork led to a decrease in on-chain activity, which also implies a decrease in fees paid and coins destroyed. As a result, the supply of ETH has started to grow since April.

According to the calculations of analysts at the venture capital fund a16z, the Ethereum mainnet is not among the top five blockchains in terms of the number of active wallets per month. It sits in eighth place with a figure of 6 million.