Ethereum Debate Heats Up: Messari Sparks Fierce Debate Over Declining Fees
After stating that Ethereum is dying due to a drop in network income in August, Messari research manager AJC provoked a heated controversy over the weekend. In August, Ethereum’s fees brought in $39.2 million, down more than 40% year over year and about 20% month over month, according to an X post by AJC.
Ethereum’s fundamentals are collapsing
AJC
However, many readers of the post disagreed, citing Ethereum’s growing stablecoin supply, app income, metrics, and ongoing L2 scaling. They also highlighted the fact that Ethereum is a commodity and not a tech stock, so revenue should not be used to determine its worth. The March 2024 update to Dencun was mostly responsible for Ethereum’s revenue drop. For layer 2 scaling networks that publish transactions via the base layer, this modification decreased transaction fees.
Is Ethereum Thriving or Dying? Experts Clash Over Revenue Metrics
Ethereum’s demise is unlikely, according to Henrik Andersson, chief investment officer of Apollo Crypto. Stablecoin supply, throughput, and active addresses are all at or close to all-time highs, indicating that the ecosystem is still thriving, according to data from the Ethereum L2 analytics tool GrowthePie.
We believe both Ethereum and Bitcoin have a place in a crypto portfolio. Ethereum is becoming the neutral decentralized base layer for finance and just like Bitcoin is not valued on revenue but as a store of value, we don’t believe Ethereum can be valued solely on its revenue.
Andersson
AJC defended his usage of revenue to value the layer-1 blockchain in response to his detractors. He clarified that one of the biggest historical demand drivers of consumption is currently heading toward zero because it is collected in Ether. AJC countered that, in terms of demand, active addresses and transactions are just useless information.
Ethereum Survives 150 Death Announcements: Here’s Why Experts Are Bullish
Since 2014, Ethereum has been announced at least 150 times by different sources. According to Ethereum Obituaries, the majority of these deaths—roughly 40—have occurred this year. However, Ethereum is still evolving, according to Ryan McMillin, chief investment officer of Merkle Tree Capital. He went on to say that it is frequently deemed dead when its narrative falters, fees drop, transactions decline, or it is outperformed by rivals. Theoretically, he continued, developers and capital may move to other places gradually but permanently because smart contracts are a competitive industry.
But in practice, its developer community, entrenched DeFi protocols, and regulatory acceptance give it more staying power than the obituaries suggest; its current narrative is it will be the TradFi chain of choice, although the SOL ETF may disrupt that too. The bigger story is that crypto is maturing into an ecosystem of differentiated assets, and Ethereum will remain one of the central pieces for years to come, and competition with other L1s is very healthy.
McMillin
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