Crypto winter is harsh, even the Ethereum network is "doing business" at a loss!
The remaining profit after deducting income from the Ethereum network's expenses is recording a large negative number. That shows that even the leading ecosystem is still "suffering" because of the current gloomy market period.
According to data from Blockworks Research , Ethereum's blockspace has continuously recorded profits since The Merge. But with this September, the profits of the ETH "business" are suffering heavy losses!
Blockchain profit means the operating profit of the Ethereum network, which is the amount remaining after subtracting expenses from income. With Ethereum, earnings are total transaction fees. Meanwhile, the network must pay back the validator and the newly issued ETH.
Blockspace profit = Total transaction fees - (Fee paid to validator + value of newly issued ETH)
Like Coin68explained in the 1 year post-The Merge anniversary post, the Ethereum network is more efficient, deflationary, and consumes much less energy than when it was using Proof of Work. However, due to harsh market conditions and a prolonged winter that reduced on-chain activity, Ethereum is seeing negative blockchain profits for the first time in many months.
According to ultrasound.money , this month there were 8,900 new ETH issued, combined with a decline in on-chain activity, causing transaction fees collected by the network to plummet. This leads to a negative profit of 15.9 million USD in September 2023.
The clearest evidence is that swap and trading activities for stablecoins such as USDT and USDC have decreased by up to 90% since the peak in March 2023. Next was the decline of NFTs when a series of blue-chip NFT collections dropped 83% from the ceiling price, forcing many investors to cut losses and no longer have any "interest" in the field.
However, the good news is that some prominent Layer-2s such as Arbitrum and Optimism still maintain sustainable operations despite the downtrend.
According to a valuation study based on the number of users of the network, ETH price is undervalued by 27% compared to its real value.