Ethereum's fee revenue is clearly declining as Layer-2 retains most of the value, weakening L1's direct fee collection ability.
ETH once relied on Layer-2 for scaling. However, the phenomenon of 'revenue leakage' to L2 is growing: ETH revenue has dropped from $2.52 billion at the beginning of the year to about $604 million, while Base [BASE] only returns a small portion of settlement fees to L1.
MAIN CONTENT
Ethereum fee revenue has decreased significantly as Layer 2 retains most of the fees.
Base has a 365-day revenue of about 83 million USD, with only ~8% returned to Ethereum.
BitMine (BMNR) increases its ETH holdings but with poor effectiveness, increasing mNAV risk.
Ethereum's fee revenue weakens as Layer-2 retains most of the value.
Ethereum's revenue has declined from 2.52 billion USD to about 604 million USD as L2 retains most fees and only returns a small portion of settlement fees to L1.
Base [BASE] highlights this trend: 365-day revenue of about 83 million USD, but only nearly 8% returned to Ethereum as settlement fees, equivalent to about 6.7 million USD. This model is common in Arbitrum, Optimism, and Polygon, weakening ETH's ability to collect fees directly over time.
The declining revenue data reflects soft on-chain activity on L1. As fees are retained in L2, the amount of ETH burned decreases, weakening the network's deflationary momentum. Source: Token Terminal
If this model persists, low L1 fees and limited burn may cause ETH to maintain a state of net inflation, hindering sustainable price increases despite overall system throughput rising due to L2.
From a derivatives market perspective, traders can track OI/funding and liquidation clusters to position risk of fees and liquidity around ETH/L2 on BingX, combining leverage strategies and risk management based on fee volatility.
BitMine (BMNR) increases its exposure to ETH, which is highly speculative.
BMNR holds 3.66 million ETH and just acquired an additional 38,596 ETH, yet ETH remains capped below 3,200 USD; BMNR token fell 9.17% on the day and -32% for the quarter, making the strategy lean towards speculation.
Recently, a wallet linked to BitMine purchased an additional 38,596 ETH over two days. Despite the large scale, the price of ETH barely reacted, remaining capped below 3,200 USD. In contrast, BMNR was clearly impacted: the closing price on the day was -9.17%, bringing the quarterly decline to 32%, marking the worst quarter since Q3 2022. Source: TradingView (BMNR/USDT)
Lackluster performance indicates that BMNR's heavy ETH bets have not yielded results. With L2 underperforming and low fee burn, ETH maintains net inflation, limiting upward momentum. This puts pressure on BMNR's mNAV, increasing portfolio risk.
The developments reinforce the view: without a marked improvement from L2 activity and the ratio of value returning to L1, continued accumulation of ETH by BMNR leans more towards speculation than a foundational cash flow-based strategy.
What could improve ETH's outlook and reduce BMNR's mNAV risk?
ETH needs stronger on-chain activity and a higher ratio of L2 fees returning to L1 to increase burn, improve revenue, and support prices; only then could pressure on BMNR's mNAV potentially ease.
Positive signals include: increased settlements from L2 to L1; actual trading volume rising in both L1/L2; improved fee structure allowing for higher burns; and recovering market risk appetite. Conversely, if L2 continues to retain most fees, ETH will struggle to regain deflationary characteristics, while BMNR's mNAV will face prolonged pressure.
Conclusion
L2 helps expand Ethereum but causes a 'leak' of fee revenue from L1. In this context, BMNR's increased ETH holdings have yet to yield results and carry a speculative tone, as low burn and weak ETH price reactions prevail.
Layer-2 (Base, Arbitrum, Optimism, Polygon) retains most of the transaction value, causing ETH fee revenue to decline.
BitMine's mNAV faces pressure; weak L2 and lackluster ETH price reactions mean accumulating ETH is increasingly speculative.
Frequently Asked Questions
Why has Ethereum's fee revenue declined sharply?
As L2 retains most fees and only returns a small portion of settlement fees to L1, ETH revenue has dropped from 2.52 billion USD at the beginning of the year to about 604 million USD, reflecting weakened L1 activity and low burn.
How much fee does Base pay to Ethereum?
In Base's 365-day revenue of about 83 million USD, only about 8% is returned to Ethereum, which is nearly 6.7 million USD, indicating a low return relative to the value retained at L2.
Why is BitMine's ETH holding strategy considered speculative?
BMNR holds 3.66 million ETH and just bought an additional 38,596 ETH, but ETH prices are capped below 3,200 USD; the BMNR token dropped 9.17% on the day and -32% for the quarter, while low burn weakens the fundamental argument.
What risks does BMNR's mNAV face?
If L2 continues to retain fees and ETH does not recover revenue/burn, BMNR's mNAV may decline further due to poor portfolio performance and high sensitivity to ETH's volatility.
Source: https://tintucbitcoin.com/bmnr-nguy-co-doanh-thu-eth-giam/
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