Ethereum's Evolving Value Capture and Its Implications for Investors

Ethereum's economic model has undergone a profound transformation in 2025, shifting from a fee-driven platform to a foundational settlement and data availability layer for a decentralized economy. This evolution, driven by major upgrades like EIP-1559, the Merge, and the Fusaka upgrade, has redefined how value is captured and distributed across the Ethereum ecosystem. For investors, understanding this transition is critical to navigating Ethereum's valuation in a post-fee world.

The Decline of Mainnet Fee Revenue and the Rise of Layer 2s

Ethereum's mainnet revenue has plummeted in 2025, falling to $39.2 million in August from $157.4 million in August 2023. This decline is not a sign of weakness but a reflection of the network's strategic pivot toward scalability. Layer 2 (L2) rollups such as Arbitrum, Optimism, and Base now process over two million transactions daily, handling 90% of Ethereum's transaction volume. While this has reduced user fees and improved accessibility, it has also shifted value capture away from the mainnet. For instance, L2 networks paid just $10 million in mainnet security fees in 2025, a stark drop from $113 million in 2024. This shift has made Ethereum increasingly inflationary, as issuance now outpaces fee burns during low-usage periods.

The Role of Layer 2s in Ethereum's New Economic Model

Layer 2s have become the primary drivers of Ethereum's growth, enabling cheaper transactions and broader adoption. However, this has introduced a valuation challenge: while Ethereum processes vast economic volumes- such as $8 trillion in stablecoin transfers in Q4 2025-much of the revenue accrues to L2 operators rather than the mainnet. A 10 percentage point increase in L2 adoption correlates with a 13% reduction in median base fees, highlighting the trade-off between scalability and fee-based value capture.

The Fusaka upgrade, implemented in December 2025, sought to address this by enhancing data availability (DA) pricing. By introducing Peer Data Availability Sampling (PeerDAS) and optimizing blob gas fees, the upgrade reduced L2 posting costs while establishing a reserve price for DA fees via EIP-7918. These changes aim to create a more predictable revenue stream for Ethereum, linking L2 growth to mainnet value accrual.

Redefining Ethereum's Valuation: From Fee Extraction to Infrastructure Value

Traditional metrics for valuing Ethereum-such as transaction fees or network revenue-are no longer sufficient. Instead, investors must consider Ethereum's role as a global public good, akin to the Internet, where value is derived from its infrastructure role rather than direct fee extraction. This framework emphasizes Ethereum's dominance in total value locked (TVL), its position as the settlement layer for stablecoins and tokenized assets, and its institutional adoption.

Data availability fees are emerging as a key component of this new model. By 2026, DA fees could become a meaningful contributor to ETH burn, potentially reversing Ethereum's inflationary trend. The Fusaka upgrade's blob base fee adjustments have already stabilized DA pricing, making it more attractive for L2s to post data to the mainnet. Additionally, institutional staking and spot ETF inflows have reinforced Ethereum's supply dynamics, with public companies and digital asset treasuries accumulating large ETH holdings.

Challenges and Opportunities for Investors

Despite these structural strengths, Ethereum faces headwinds. Its price underperformed Bitcoin in 2025, with ETF outflows and volatility reflecting unresolved questions about value capture. Critics argue that fee compression and off-chain activity dilute ETH's utility, while proponents highlight Ethereum's role in tokenization and decentralized finance (DeFi).

For investors, the key is to balance short-term volatility with long-term fundamentals. Ethereum's transition to a settlement and DA layer is still in its early stages, with potential for data availability fees to grow as L2 adoption expands. Moreover, improvements in L2 interoperability and reduced liquidity fragmentation could strengthen Ethereum's network effects.

Conclusion

Ethereum's valuation in a post-fee world requires a paradigm shift. While the network no longer relies on direct fee extraction, its value is increasingly tied to its role as the backbone of a decentralized economy. Investors who recognize this evolution-focusing on infrastructure utility, institutional adoption, and DA fee potential-may be better positioned to capitalize on Ethereum's long-term trajectory. As the Fusaka upgrade and future innovations reshape the landscape, Ethereum's ability to balance scalability with value accrual will remain central to its investment thesis.