Ethereum News Today: Ethereum Transaction Volume Surges Amid Layer-2 Competition

The Ethereum network is experiencing a notable rise in transaction volume as Ether (ETH) moves closer to the $5,000 level. According to Nansen, Ethereum processed over 1.7 million transactions on Tuesday, with daily averages nearing all-time highs [1]. This surge indicates increased on-chain activity but also reflects a broader shift in the blockchain landscape, where competition is siphoning traffic and revenue away from the Ethereum mainnet.

Layer-2 solutions such as Arbitrum and Base have become popular alternatives, offering users lower fees and faster transaction times. On Monday, Arbitrum recorded over 3.4 million transactions, while Base logged 8.6 million [2]. These layer-2 networks are effectively offloading much of the transaction volume that would traditionally occur on the Ethereum mainnet. At the same time, high-throughput layer-1 competitors like Aptos are also capturing significant user traffic, with the latter recording 3.8 million transactions on Monday [2]. These developments highlight the growing diversification of the blockchain ecosystem and the challenges Ethereum faces in maintaining its dominance.

Despite the high transaction counts, Ethereum’s active address growth has shown little progress. Since 2018, the number of active addresses has remained within a range of 400,000 to 600,000, with only occasional spikes above 1 million [1]. This stagnation suggests that the network is not attracting a growing user base but rather seeing traffic being redirected to other blockchains. The cumulative effect is a decline in Ethereum’s market share and a reduction in protocol revenue [1].

Network fees on the Ethereum base layer have also seen a steep decline since 2022, partly due to the Dencun upgrade implemented in March 2024 [1]. This upgrade optimized data availability for layer-2 solutions, further encouraging users to move transactions off the mainnet. While this has led to cost savings for users, it has also reduced the revenue available to Ethereum validators and developers, prompting stakeholders to re-evaluate the network’s strategic direction.

Polygon Labs CEO Marc Boiron has warned that attempting to directly compete with high-performance layer-1 blockchains on throughput metrics could be "dangerous" for Ethereum [1]. As next-generation blockchains continue to gain traction, Ethereum must find a balance between maintaining its core principles of decentralization and security while addressing the growing demand for faster and more cost-effective alternatives.

The evolving competitive environment underscores the need for Ethereum to adapt its scaling and execution strategies. While it remains a leading smart contract platform, its ability to retain market leadership will depend on its capacity to innovate and respond to shifting user preferences [1].

Source: [1] ETH transaction count rising amid $5K push, but ... (https://cointelegraph.com/news/eth-transaction-count-rising-5k-push-competition-erodes-fees) [2] ETH transaction count rising amid $5K push, but ... (https://cointelegraph.com/news/eth-transaction-count-rising-5k-push-competition-erodes-fees)