Is Ethereum dying? No — while Ethereum’s fee revenue fell sharply (August fees ~$39.2M, ~44% year‑over‑year), core indicators such as daily active addresses, stablecoin supply and Layer‑2 throughput remain robust, suggesting a shift in revenue dynamics rather than terminal decline.
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Fee revenue fell to ~$39.2M in August — a ~44% year‑over‑year decline
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Daily active addresses grew to ~552,000 (up ~21% vs. prior year)
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Network trends show rising L2 activity, stablecoin supply and ETF inflows despite lower base‑layer fees
Meta description: Is Ethereum dying? Analyze the August revenue drop, Layer‑2 growth, active addresses and ETF flows in this COINOTAG update — read expert analysis.
What is causing Ethereum’s revenue decline?
Ethereum revenue decline is primarily driven by protocol-level changes and Layer‑2 adoption that reduced base-layer fees after upgrades like Dencun. While fee revenue fell sharply in August, network usage has shifted to more efficient post‑transactions on L2s, lowering collected base-layer revenue without signaling outright network failure.
How did the Dencun upgrade and Layer‑2 adoption affect fees?
The March 2024 Dencun upgrade reduced calldata and posting costs for Layer‑2 rollups, pushing transaction volume off the base layer. This lowered on‑chain fee revenue even as total ecosystem throughput grew. Analysts report August fees at roughly $39.2 million, down over 40% year‑over‑year and ~20% month‑over‑month.
A Messari research manager, AJC, argued publicly that “Ethereum’s fundamentals are collapsing,” citing the revenue decline and noting demand for ETH-denominated fee revenue trending lower.
Source: AJC
That claim triggered debate among market participants and researchers. Critics say measuring a base-layer settlement system like a revenue-generating company is a flawed comparison. Ethereum is increasingly a settlement layer for L2s, and value accrual can be driven by broader utility rather than immediate fee capture.
How strong are Ethereum’s usage metrics despite lower fees?
Usage metrics remain positive: analytics cited by industry sources show increased stablecoin supply on Ethereum, robust Layer‑2 throughput and rising active addresses. As of Aug. 30, YCharts data recorded over 552,000 daily active addresses, a ~21% increase year‑over‑year, indicating sustained on‑chain engagement.
There were over 552,000 daily active addresses on Ethereum as of Aug. 30. Source: YCharts
Henrik Andersson, chief investment officer at Apollo Crypto, told industry press that Ethereum remains “a vibrant ecosystem” with stablecoin supply, throughput and active addresses near record levels. He emphasized that Ethereum should not be valued solely on short‑term revenue metrics.
AJC maintained that revenue denominated in ETH historically drove demand for consumption, and the decline in fee revenue is meaningful for valuation frameworks that rely on fee capture. This highlights a core debate: should Ethereum be treated like a revenue‑generating asset or as a decentralized infrastructure layer with different value drivers?
Why has Ethereum been declared “dead” repeatedly?
Ethereum has faced many “death” narratives. According to Ethereum Obituaries, the network has been declared dead roughly 150 times since 2014, including about 40 declarations this year alone. Negative narratives typically spike when fees fall, transaction counts moderate, or competitors gain attention.
Ethereum has been declared dead 150 times before ACJ’s post. Source: Ethereum Obituaries
Ryan McMillin, CIO at Merkle Tree Capital, said Ethereum adapts and is supported by entrenched DeFi protocols, a deep developer community and growing regulatory acceptance. He cautioned that competition from other Layer‑1s like Solana—and upcoming spot ETFs—could shift capital flows, but not necessarily end Ethereum’s role.
One tailwind for Ethereum in 2025 has been spot Ether exchange‑traded funds, which unlocked institutional flows and linked Ether to broader stablecoin and institutional demand. However, the potential arrival of spot Solana ETFs could alter competitive dynamics for mainstream capital.
Related: Ether whales have added 14% more coins since April price lows
How should investors assess Ethereum’s health?
Assess Ethereum by combining protocol metrics, developer activity, monetary flows and macro context. Fee revenue is one input; other signals like L2 adoption, stablecoin balances, daily active addresses and ETF inflows provide a fuller picture.
Frequently Asked Questions
Is Ethereum dying because fee revenue fell in August?
No. A drop in fee revenue (August ~ $39.2M) reflects Layer‑2 migration and protocol upgrades that lowered base‑layer fees. Core usage metrics remain strong, so the revenue decline signals a shift in capture, not definitive network collapse.
Can Layer‑2s make Ethereum obsolete?
Layer‑2s change where transactions occur but rely on Ethereum for final settlement. L2 growth reduces base‑layer fee revenue but strengthens Ethereum’s role as settlement infrastructure rather than making it obsolete.
How often has Ethereum been declared dead?
Ethereum Obituaries lists roughly 150 “deaths” since 2014, with about 40 declarations occurring this year. Such narratives are common during market rotations or fee declines.
Key Takeaways
- Revenue fell sharply: August fees were about $39.2M, down ~44% year‑over‑year.
- Usage remains resilient: Daily active addresses and L2 throughput are near highs, indicating continued adoption.
- Valuation nuance: Ethereum functions increasingly as a settlement layer; fee revenue alone is an incomplete valuation metric.
Conclusion
Ethereum’s August revenue decline highlights a material shift in where value is captured, but it does not by itself prove the network is dying. Core indicators — daily active addresses, stablecoin supply, Layer‑2 adoption and ETF flows — point to continued ecosystem strength. Investors and analysts should assess a broader set of metrics and monitor competitive ETF developments as the landscape evolves.
