Ethereum's Structural Turn: Can Low Gas Fees and Rising Open Interest Signal a Base Formation for Institutional Reentry?

Ethereum's journey in 2025 has been defined by a quiet but profound structural shift. After years of grappling with scalability challenges and volatile gas fees, the network has entered a new phase marked by network utility recovery and institutional reentry dynamics. With gas fees stabilizing below $1 and Layer 2 adoption surging, Ethereum is no longer a victim of its own success-it's a platform reclaiming its role as the backbone of decentralized finance. Meanwhile, open interest trends in derivatives markets suggest a cautious but growing appetite for leveraged positioning. Together, these developments raise a critical question: Is Ethereum forming a base for institutional capital to reenter the market?

Network Utility: The Foundation of Recovery

Ethereum's gas fee landscape in Q3-Q4 2025 tells a story of efficiency. Average gas prices, measured in gwei, have stabilized below 3 gwei, a stark contrast to the 220 gwei peaks of 2020-2021. This decline is not accidental-it's the result of Layer 2 (L2) adoption, post-Merge optimizations, and the upcoming Fusaka Upgrade. By Q3 2025, L2 networks like Arbitrum and Base had captured over 70% of Ethereum's transaction volume, reducing congestion and making transactions predictable and affordable.

The Fusaka Upgrade, launched in late 2025, further accelerates this trend. Key innovations like PeerDAS (Peer-to-Peer Data Availability Sampling) and Blob-Only Parameter (BPO) forks enable Ethereum to scale data availability without compromising security or decentralization . These upgrades reduce the hardware burden on validators, lower L2 fees, and increase blob throughput from 6 to 128 per block. For institutions, this means Ethereum is no longer a bottleneck-it's a scalable, cost-effective infrastructure for large-scale applications.

Open Interest: A Barometer of Institutional Sentiment

While Ethereum's network utility has improved, the derivatives market tells a different story. Q3 2025 saw a dramatic surge in Ethereum futures open interest (OI), peaking at $220.37 billion on October 6 before collapsing by $19 billion in a single day due to a deleveraging event. By Q4, OI had dropped over 50% from its peak, signaling a flush of leverage amid heightened volatility.

Yet, beneath the chaos, there are signs of stabilization. Ethereum's Total Value Locked (TVL) remained around $70 billion post-November, while Total Value Secured (TVS) held above 36 million according to research. Meanwhile, futures and options markets continued to show resilience. In September, Ethereum futures averaged $8.7 billion in daily open interest, and options hit a record $1.2 billion according to market data. These figures suggest that while retail speculation has cooled, institutional players are still testing the waters.

The Correlation: Utility Improvements and Leveraged Positioning

The interplay between Ethereum's network utility and open interest trends is critical. Lower gas fees and improved scalability have made Ethereum more attractive for institutional-grade applications, such as real-world asset (RWA) tokenization and decentralized infrastructure . However, the shift to L2 solutions has also reduced the base layer's direct economic capture, complicating ETH's valuation model .

The Fusaka Upgrade addresses this paradox. By enhancing data availability and throughput, it strengthens Ethereum's role as a settlement layer for tokenized finance, even as L2s handle execution . This separation of concerns allows Ethereum to maintain its value proposition without competing directly with low-fee chains like Solana. For institutions, this means Ethereum offers both scalability and security, two pillars of institutional-grade infrastructure.

Institutional Reentry: A Path Forward

The question of institutional reentry hinges on two factors: economic sustainability and regulatory clarity. Ethereum's post-Fusaka ecosystem is designed to deliver both. The upgrade's Verkle Trees and increased gas limits reduce storage costs and improve node accessibility, fostering decentralization . At the same time, the 2026 Digital Asset Outlook highlights growing macro demand for alternative stores of value, which could drive capital inflows into Ethereum as a "cash-flowing platform" .

However, challenges remain. The October 2025 deleveraging event exposed vulnerabilities in leveraged positioning, with Ethereum's OI decline outpacing Bitcoin's during the same period according to analysis. This suggests that while institutional interest is present, it's still cautious. For Ethereum to fully capitalize on its structural improvements, it must demonstrate consistent utility and resilience in volatile markets.

Conclusion: A Base Forming?

Ethereum's 2025 narrative is one of structural rebirth. Low gas fees, L2 adoption, and the Fusaka Upgrade have transformed the network into a scalable, efficient platform. Meanwhile, open interest trends-despite their volatility-indicate that institutions are beginning to reengage. The key question is whether these developments signal a base formation for long-term capital inflows.

The answer lies in Ethereum's ability to balance network utility with economic value accrual. If the post-Fusaka ecosystem can sustain low fees while maintaining its role as a settlement layer, Ethereum may well see a new wave of institutional adoption. For now, the data suggests a cautious optimism: the base is forming, but the climb will require patience and precision.