Ethereum’s daily transaction fees have dipped below $1 million for the first time since September 2024, marking only the second instance this has occurred since November 2020. According to Token Terminal data, the network generated $731,472 in daily fees on February 8. The last similar decline spanned from August 17 to September 8, 2024, indicating a challenging period for Ethereum’s revenue generation.
Ether, Ethereum’s native cryptocurrency, has also underwhelmed investors over the past year, failing to reach new highs despite approval of spot exchange-traded funds (ETFs) in the US and Hong Kong. A broader industry downturn, exacerbated by rising supply since April 2024, has affected Ether’s performance. This increase has reversed the deflationary trend initiated by the Merge in September 2022, with Ethereum’s total supply now exceeding pre-Merge levels.
The Merge transitioned Ethereum away from mining-based issuance, reducing its supply inflation rate, and the London hard fork in August 2021 introduced a mechanism that burns a portion of transaction fees. These moves aimed to make Ethereum a deflationary asset especially during periods of high network activity.
Ethereum’s layer-2 scaling solutions have helped mitigate congestion and fee spikes but have also moved activity off the main blockchain. Interoperability issues among these layer-2 networks raise concerns about a fragmented Ethereum ecosystem. Meanwhile, competitors like Tron and Solana are gaining momentum, outperforming Ethereum in total fees generated in recent months.
Additionally, internal tensions within the Ethereum Foundation have raised uncertainty. In January, co-founder Vitalik Buterin assumed sole leadership amid criticism of executive director Aya Miyaguchi and conflict-of-interest concerns related to researchers’ advisory roles. Despite these challenges, Ethereum enthusiasts remain optimistic, as accumulation addresses recorded the largest single-day inflow of Ether on February 7, amounting to 330,705 ETH ($833 million).
