Ethereum's shift to Proof-of-Stake (PoS) was anticipated to drive monetary deflation, scale applications, and boost ETH's value. However, as the network marks its second PoS anniversary, skepticism has emerged—partly due to ETH's underperformance against BTC and SOL, but more critically, due to structural challenges in Layer1-Layer2 dynamics and staking liquidity.
This analysis explores fee trends, Blob transactions, Layer2 adoption, staking growth, and DeFi liquidity to uncover why ETH's price momentum has faltered.
Key Findings
ETH Underperforms Peers:
- ETH/USD gained 44.28% over two years, but ETH/BTC fell 48.70%, and ETH/SOL dropped 63.55%.
Declining Fee Revenue:
- Monthly fee revenue averaged **$32.8M** post-PoS but began declining in August 2024 ($27.96M).
Layer2 TPS Surge with Blobs:
- Arbitrum One (+122%), Base (+694.69%), and OP Mainnet (+54.94%) saw TPS spikes post-Blob integration. Base’s TPS now exceeds Ethereum’s by 158.85%.
Low Blob Costs for Layer2s:
- Top 20 Blob submitters paid just $5.99M** total (~$2.27 per Blob). Base spent only $109K** despite 695% TPS growth.
Slowing Staking Growth:
- Staked ETH grew 150.18% in two years, but daily growth dropped from 0.17% (2023) to 0.06% (2024).
DeFi Liquidity Shifts:
- Ethereum’s TVL rose 50.12% in 2024, but Solana’s surged 242.20%. At current rates, Solana’s TVL could overtake Ethereum’s within 12 months.
1. ETH’s Weak Performance Against BTC and SOL
While ETH/USD gained 44.28% since PoS transition (peaking at $4,071), its relative value eroded:
- ETH/BTC: Fell 48.70% (0.0807 → 0.0414).
- ETH/SOL: Plummeted 63.55% (125.19 SOL → 17.49 SOL).
Fee Revenue: Growth Then Decline
- 2023–2024 Peak: Monthly fees averaged $32.8M**, with spikes above **$60M.
- Recent Drop: August 2024 fees fell to $27.96M, signaling weakening demand.
👉 Why Ethereum’s Fee Model Needs Rethinking
2. Layer2 Expansion and Blob Economics
Ethereum’s fee reductions aimed to spur demand, but Layer2s captured most activity at lower costs:
Post-Blob TPS Growth (Top Layer2s)
| Chain | Pre-Blob TPS | Post-Blob TPS | Growth | vs. Ethereum |
|-------------|-------------|--------------|---------|--------------|
| Arbitrum One| 9.68 | 21.49 | +122% | +60.24% |
| Base | 4.33 | 34.41 | +695% | +158.85% |
| OP Mainnet | 4.15 | 6.43 | +55% | -22.13% |
Blob Costs Remain Low:
- Top submitters paid $2.27 per Blob on average.
- Base’s 694.69% TPS growth cost just $109K.
TVL Shifts:
- Ethereum’s TVL dropped 22.13% post-Blob, while Base’s surged 105.33%.
3. Staking Slowdown and Liquidity Competition
Staking Growth Decelerates
- Total Staked ETH: 34.38M (+150.18% since PoS).
- Daily Growth Rate: Fell from 0.17% (2023) to 0.06% (2024).
Top Stakers:
- Lido: 9.75M ETH (~28% of total).
- Fastest Growers: Renzo (+7457%), ether.fi (+3128%).
DeFi Liquidity: Ethereum vs. Solana
| Metric | Ethereum (2024) | Solana (2024) |
|-------------|----------------|--------------|
| TVL Growth | +50.12% | +242.20% |
| Projected | $444.68B | $47.81B |
Projection: Solana’s TVL may surpass Ethereum’s in 12 months at current rates.
FAQs
Q1: Why has ETH underperformed BTC and SOL?
A1: Layer2 solutions diverted demand from Ethereum’s base layer, reducing fee revenue and ETH’s value accrual. Meanwhile, SOL capitalized on faster transactions and lower costs.
Q2: How do Blobs affect Ethereum’s economics?
A2: Blobs lowered Layer2 costs (avg. $2.27 per Blob), but Ethereum’s revenue from these transactions remains minimal—highlighting a misalignment in value capture.
Q3: Can Ethereum regain its DeFi dominance?
A3: It must address staking stagnation and Layer2 competition. Without higher native demand, Solana’s growth trajectory could eclipse Ethereum’s TVL.
👉 Explore Ethereum’s Roadmap Updates
Conclusion
Ethereum’s PoS transition achieved scalability but exposed vulnerabilities: fee revenue instability, Layer2 cannibalization, and staking liquidity gaps. For ETH to rebound, the network must recalibrate value distribution between Layer1 and Layer2 while revitalizing demand. The next year will be pivotal in determining whether Ethereum can outpace rivals like Solana—or cede further ground.
Note: All data sourced from Dune Analytics, DefiLlama, and CryptoQuant.