The Ethereum blockchain network is on track to reach $1 billion in annual profits, as it reported a Q1 income of $365 million, marking a 155% increase in quarterly revenue compared to the previous year. According to analyst Michael Nadeau from The DeFi Report, the network’s first-quarter income in 2024 is nearly 200% higher than its profit in Q4 2023, which was $123 million. Ethereum’s fee revenue, generated through user transactions, reached $1.17 billion, representing a 155% rise from Q1 2023 and an 80% increase from the previous quarter.
The significant increase in network activity, primarily driven by a surge in decentralized finance (DeFi) activity, was the main reason for the revenue growth, stated Nadeau. In fact, average daily transactions on the Ethereum blockchain in 2024 have already surpassed the figures from the previous year and are approaching the peak results recorded in 2021.
In 2024, there have been over 1.15 million average daily transactions, slightly higher than the 1.05 million in 2023 and just below the 1.25 million recorded in 2021.
Although Ethereum was launched in 2015, it only achieved its first profitable year in 2023 when it earned $623 million. However, this amount was significantly lower than its peak revenue of $9.9 billion in 2021. Nadeau explained that this was largely due to the shift to proof-of-stake consensus in September 2022, which led to an 80% decrease in token incentives paid to miners (now validators). He also noted that Ethereum’s fees have grown by 58% since 2017.
Nadeau also shared his market predictions for the coming years, stating that “crypto will outperform everything else.” He anticipated favorable liquidity conditions for the next few years, citing the need for the United States to refinance a large amount of debt and the market’s expectation of three rate cuts from the Federal Reserve this year. He also highlighted three catalysts that point to a bullish setup for the next few years: the introduction of U.S. spot Bitcoin exchange-traded funds (ETFs), the upcoming Bitcoin halving on April 20, and the ongoing innovation cycle in the cryptocurrency market. Nadeau believes that these factors will drive increased interest in cryptocurrencies, attract new venture funding, and renew retail interest in crypto as the industry matures.
Regarding the correlation between Bitcoin and Ethereum, Nadeau stated that the two cryptocurrencies are “quite correlated.” Bitcoin tends to outperform in the early stages of a bull market due to its widespread recognition, while Ethereum and other altcoins tend to outperform in the later stages. Nadeau noted that altcoins have outperformed Bitcoin throughout both cycles but emphasized that this trend will continue only for altcoins that have a clear product-market fit.
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