- An early Ethereum investor exits with $8.66M profit as ETH revenue drops 95% post-Dencun, raising concerns over network sustainability.
- Ethereum’s revenue decline forces a rethink of its economic model, as L2 adoption slashes blob fees and strains direct network income.
- The upcoming Pectra upgrade aims to enhance scalability and efficiency, but Ethereum must balance growth with long-term profitability.
According to Lookonchain, an early Ethereum investor recently offloaded his remaining 2,001 ETH, securing total profits of $8.66 million. This investor initially purchased 5,001 ETH in 2017 at an average price of $277. Despite witnessing Ethereum peak at $4,878 in the last bull run, he refrained from selling. However, he began liquidating last month, marking the end of a long-term hold. At its highest valuation, his holdings were worth $23 million.
Ethereum’s Revenue Decline Raises Concerns
Besides this major sell-off, Ethereum’s network revenue is plummeting. The week ending of March saw Ethereum generate only 3.18 ETH, roughly $6,000. This represents a 73% decrease from the previous week and a 95% decline from mid-March 2024. The drastic drop highlights ongoing economic challenges post-Dencun upgrade.
Launched in March 2024, the Dencun upgrade aimed to cut transaction costs by shifting L2 data to off-chain blobs. However, the transition led to a sharp decline in blob fee revenues, with VanEck estimating a 95% reduction. Consequently, Ethereum’s profitability model appears increasingly fragile. L2 transactions would need to surge over 22,000 times to offset losses from traditional transaction fees.
Ethereum Prepares for Pectra Upgrade
However, Ethereum is not resting as the network is working on its next major update, the Pectra upgrade, which will be released in 2025. The update will enhance blob space allocation and scalability as a whole. Ethereum also aims to optimize transactions for efficiency so that its economic model can be more sustainable.
Moreover, as Ethereum adapts, developers and stakeholders must navigate a shifting revenue landscape. The reliance on L2 scaling solutions highlights both opportunities and risks. While L2s reduce costs, they also limit Ethereum’s direct fee income, creating challenges in long-term network sustainability.
Despite all these doubts, Ethereum remains at the forefront of the blockchain space. At the time of writing ETH price is at $1,876.41 with a 24-hour volume of $14.63 billion. Despite Ethereum dropping 0.17% over the last 24 hours, its long-term strategy is to continue development.
