While this figure represents a 47% decrease compared to the previous quarter, Ethereum’s layer 1 fees fell to the lowest level since the fourth quarter of 2020 in Q3.

In the “ETH Report: Q3-24” published on October 16, it was emphasized that Ethereum (ETH) layer 1 fees fell to the lowest level recorded since 2020. DeFi Report thinks this situation is due to several factors.

Chief among these factors is the growth of layer 2 networks in the Ethereum ecosystem. Layer 2 solutions have the potential to appeal to a wider user base by reducing transaction costs on the network.

The EIP 4844 update is another important change aimed at improving the efficiency of the network. With the effect of this update, users had the opportunity to make transactions at lower costs, which encouraged the use of the Ethereum network.

The report also revealed that Ethereum’s Total Value Locked fell by 14% during the quarter, but increased by 133% in the last year.

While this reflects the overall health of the Ethereum ecosystem, it also shows that efforts to reach a broader user base are effective. However, while the token itself lost 21% in value this quarter, more tokens were issued on the network and burns were insufficient.

The analysis in the DeFi Report predicts that the decline in Ethereum’s fees is associated with several important developments. The addition of the EIP 4844 update, the emergence of cheaper data availability networks, and the introduction of the modular data availability network Celestia are listed as some of the reasons for this situation.

Thanks to these new developments, users are able to make transactions at more affordable costs, and this leads to greater adoption of the Ethereum network.

The launch of Uniswap Labs’ new layer 2 solution Unichain stands out as another factor that may bring more losses for Ethereum. Uniswap’s impact on the Ethereum network also attracts attention.

While the DeFi Report stated that Uniswap controls 20% of gas fees, it expressed concerns that Uniswap’s efforts to build its own layer 2 could negatively impact the revenues of the Ethereum network.

Uniswap’s development of its own solution may cause costs in the Ethereum network to increase and therefore users to turn to other platforms.

Michael Nadeau, founder of the DeFi Report, stated that Ethereum validators can turn this situation into an opportunity and find the opportunity to make more transactions and burn more tokens, thus increasing the demand for tokens and increasing the profit of the network. This situation presents an important opportunity for the sustainability of the Ethereum ecosystem.

However, Nadeau also noted risks for Ethereum validators and token holders. In particular, he stated that approximately $368 million in transaction fees paid by Uniswap may be lost with the launch of Unichain. This means the funds will go to Uniswap Labs and possibly Uniswap token holders.

There are also losses for ETH token holders. The fact that the protocol burns less ETH and transaction fees are directed to UNI token holders may create a negative situation for ETH holders. These developments stand out as important dynamics that need to be watched carefully for the future of the Ethereum ecosystem.

These challenges faced by Ethereum may change the balance within the ecosystem and affect users’ trust in the platform. Therefore, the Ethereum community needs to improve its strategies and produce more robust solutions by taking these dynamics into account.