Ethereum blockspace on track for first unprofitable month since the Merge

Blockworks
Blockworks

19 Sep 2023 6:10 PM

Ethereum’s blockspace is on track to turn a financial loss for the first time since the Merge, according to Blockworks data. ...

  • Ethereum's blockspace is experiencing negative profitability for the first time since the switch to proof-of-stake consensus in September 2022.
  • Blockworks Research's Analytics data shows that Ethereum blockspace has consistently been profitable until now.
  • The blockspace profitability metric is calculated by subtracting protocol fees and reward issuance from total transaction fees.
  • In December 2022, blockspace narrowly turned a loss, generating $3.5 million in losses, compared to $414 million in gains throughout 2023.
  • September 2023 is shaping up to be the first month with significant losses for Ethereum blockspace since proof-of-stake was introduced.
  • The declining profitability is attributed to declining user activity and falling volumes in on-chain subsectors, such as stablecoin swaps, transfers, and NFT trading.
  • Ethereum layer-2 networks like Arbitrum and Optimism are maintaining healthy activity despite the shrinking activity on the base layer.

The article highlights a negative trend in Ethereum's blockspace profitability due to declining on-chain activity. However, it also mentions the healthy activity on Ethereum layer-2 networks, which provides some optimism.

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You May Ask

What is the blockspace profitability metric and how is it calculated?When did Ethereum switch to proof-of-stake consensus?How much loss did blockspace generate in December 2022?What is the main reason behind the declining profitability of Ethereum blockspace?Which layer-2 networks are mentioned in the article and how are they performing in terms of activity?

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