Ethereum’s Revenue Plunge Sparks Debate: Is Deflation the New Measure of Success?

Matrixport, a well-known entity in the cryptocurrency space, recently moved a significant portion of its Ethereum holdings to a centralized exchange. According to on-chain data, an associated address of Matrixport deposited 10,000 ETH to a CEX, with 4,272 ETH still remaining as of the latest update. This activity indicates a potential strategy to either hedge against price volatility or to facilitate larger-scale transactions. The move follows broader trends within the Ethereum network, where structural shifts continue to reshape the ecosystem.

Ethereum’s financial performance has been a topic of intense debate among market participants, especially given the recent divergence between price and revenue metrics. Despite a 73% price increase since the beginning of the third quarter of 2025, Ethereum’s overall network revenue fell to $39.2 million in August 2025, representing a 75% year-over-year decline. This drop is attributed in large part to the Dencun upgrade, which redirected transaction fees to Layer-2 (L2) platforms such as Base and Arbitrum. The upgrade significantly reduced on-chain activity and, by extension, the revenue generated from transaction fees on the Ethereum mainnet.

The Dencun upgrade introduced blob data to facilitate more efficient data transfer from L2s to the mainnet, reducing storage costs for users on L2 rollups. Consequently, Ethereum’s network revenue plummeted from $544.37 million in March to just $1.8 million in September, a decline of 99.7%. This shift has sparked a reevaluation of how Ethereum’s health is measured, with some analysts arguing that income from transaction fees is no longer the best indicator of the network’s success.

Market reactions to the revenue drop have been mixed. On one side, some analysts view the decline as a sign of fundamental deterioration. On the other, others see the reduction in fees as a positive development that could drive broader user adoption and long-term growth. The implementation of EIP-1559 has also played a role in reshaping Ethereum’s supply dynamics, introducing a deflationary environment through permanent token burns.

Glassnode’s on-chain data further highlights this trend, showing that Ethereum’s net issuance has moved toward a neutral or even negative balance in recent months. Exchange inflow balances turned negative in September 2025, suggesting that long-term holders are increasingly accumulating ETH while exchange balances hit a nine-year low. These data points support the argument that Ethereum is transitioning into a more value-preserving asset, akin to Bitcoin in certain economic functions.

In the broader context, Ethereum’s average gas fees have declined from $5.90 in March 2024 to $3.78 in the third quarter of 2025, further aligning with the network’s deflationary trajectory. Meanwhile, institutional adoption has surged, with over $120 billion flowing into Ethereum-based ETFs in the first eight months of 2025. As of now, 29% of the total ETH supply is staked, offering annualized yields between 4% and 6%. The platform continues to dominate the stablecoin and tokenized asset markets, holding 95% and 82% of the respective transaction volumes.