Close Menu
    Ethereum

    Ethereum’s Revenue Surge Predicted as Layer 2 Networks Enhance Transaction Efficiency

    By No Comments2 Mins Read

    30s Summary

    Ethereum’s revenue is expected to increase due to increased activity on its layer 2 scaling networks, which handle faster transaction processing and data storage. Rise in transaction data on these networks is expected to offset the previous revenue drop of 95% caused by inefficient use of temporary data storage known as “blobs”. With these networks, Ethereum could generate $66 billion in annual free cash flow by 2030, potentially driving the token price to $22,000. Factors like “burning” and “staking” can further boost Ethereum’s value.

    Full Article

    The revenue generated by Ethereum seems set to increase thanks to a surge of activity on its layer 2 scaling networks. These networks allow for faster transaction processing and data storage. In fact, according to Dune Analytics, the amount of transaction data on these networks has tripled daily since March.

    Previously, Ethereum saw a massive drop in its revenue – up to 95% – after an upgrade in March. The upgrade moved layer 2 transaction data to “blobs”, temporary stores off the main chain designed to reduce costs for users. However, these “blobs” weren’t being maximized effectively, according to Matthew Sigel, head of digital asset research at asset manager VanEck. This resulted in fewer fees collected for Ethereum.

    Things are changing though, thanks in part to Base, Scroll, and World Chain, three popular layer 2 networks. Sigel estimated in September that Ethereum could potentially generate $66 billion in annual free cash flow by 2030. This would massively increase the value of Ethereum and could drive its price up to a staggering $22,000 per token.

    According to Sigel, Ethereum has processed a whopping $4 trillion settlement value last year plus an additional $5 trillion in stablecoin transfers. That’s bigger than PayPal and is getting close to Visa’s network. Since Ethereum’s 2015 launch, it has generated $3 billion in fees.

    In addition, other value-boosting actions for Ethereum are “burning”, which removes a percentage of transaction fees from circulation permanently, and “staking”, which rewards those who secure the network with newly minted Ethereum tokens.

    On a final note, Ethereum’s price saw a 10% bump earlier this month following President Donald Trump’s election win, which seems to bode well for future cryptocurrancy investments and products in the US.

    Related Posts