Ethereum is growing strongly but revenue is down 44% in just 1 month?

Revenue Mechanism: Fee, Burn and L2 Leak

Ethereum's revenue model relies on base fees (burned via EIP-1559) and tipping (to validators), with the latter typically resulting in deflation. However, in August, the burn fell 44% to $14.1 million as average gas prices fell below 10 gwei — a multi-year low — amid sluggish mainnet activity.

L2 rollups, which benefit from Dencun's "blob" for cheaper data posting, processed over 50 million transactions (a monthly record), but only a fraction were processed on L1, leaving the base fee layer underfunded.

Meanwhile, L2 revenue jumped to $23 million (led by Base at $92 million year-to-date), but critics noted that this “costs” Ethereum’s L1 roughly $113 million per year in unmined fees.

Staking yields remain a bright spot at 3.8-4.2%, attracting $6 billion in new staking after the Pectra upgrade, but with 28% of supply locked, circulating ETH (120.7 million) is under inflationary pressure.

The Pectra upgrade (May 2025) doubled blob capacity and improved validator efficiency, but failed to stop the L2 migration - performance metrics like daily active addresses (16 million network-wide) are at all-time highs, but L1 is lagging.

The upcoming Fusaka (November 2025) promises to increase the gas limit to 150 million and improve L2 interoperability, potentially recovering some fees through “pooling-based”.

Why is ETH price skyrocketing?

ETH hits August ATH despite revenue struggles, fueled by external factors. Spot ETH ETFs have accumulated $19.2 billion AUM with weekly inflows of $2.12 billion — double the previous record — led by BlackRock and Fidelity.

Public “ETH treasury” companies like SharpLink ($200M purchase) and BitMine ($1.15M ETH, $5B) have followed MicroStrategy’s BTC strategy, staking for yield and tightening supply.

Etherealize’s $40 million raise to offer ETH to businesses has amplified this, with 59 companies holding $9 billion in ETH.

Macro factors sealed the rally: Fed Chair Powell’s hints of a September rate cut (82% chance) and inflation at 2.7% stoked risk sentiment, with ETH rising 15% in a day following the speech.

The supply of stablecoins on Ethereum hit an all-time high of $160 billion, doubling from the start of the year and underscoring the coin’s DeFi dominance despite falling L1 fees.

Conclude

Ethereum’s August paradox shows a network in flux: Price is a speculative signal, revenue is a symptom of scalability. As L2 matures and upgrades like Fusaka emerge, L1 can recover fees through “revenue sharing” EIPs. For traders, resistance at $4,579 is key—break it to $5,000; break $4,156 to $3,900. Longer term, Ethereum’s $520 billion market cap and Web3 dominance suggest resilience, but fundamentals need to catch up to sustain the hype. In crypto, ETH remains the star—but even those stars pale in the absence of substance.

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