Is Ethereum dying or revenue isn't an important focus for L1s?

Yes, the Ethereum revenue debate continues and it's interesting what the sentiments is these days and I thought it worth putting out a think-piece, that's my job after-all.

There's a very unique set of individuals who consider revenue not a relevant metric for L1 investors. According to them, people should be more concerned with censorship-resistant collateral and money, as this apparently makes any L1 more valuable.

This suggests that ETH is the most censorship-resistant collateral and money.

Facts or cope?

Let's back up a bit, what makes Ethereum the center of these revenue conversations?

Well, revenue, literally!

Enterprise research manager at MessariCrypto posted about Ethereum revenue being down 75% since August, 2023 and down 40% since August 2024 and that brought personalities such as David Hoffman, from Bankless, a company very much known to previously discussed the importance of revenue extensively in the past, to comment a disapproval to the relevance of revenue to Ethereum:

We created the technology to finally, for the first time ever, since before the Church, since before the Monarchy, since before the Nation State with tanks and guns and fighter jets… we can finally create money by the people for the people…

Ethereum is the fastest growing emerging economy on planet earth. Ethereum’s economics mirror things like early Singapore or Shenzhen where there is complete freedom of commerce, rather than focusing on taxation on central power.

This is cope, gotta appreciate the comedy though

If you follow the thread of conversations, you'll come across some supporting comments and those against this concept of revenue being equivalent to taxes, hence not something L1s should focus on.

I think that it is actually quite interesting how a great number of the comments are in support of the downtrend in revenue, and you can guess why:

ETH price is Up! (Who cares if on-chain revenue is down right?)

Active addresses(users) also up (price is up, so why not?)

What else?

Not much.

A common sarcastic response to this Ethereum revenue drop post is that CT has complained about Ethereum's high fees and now is complaining when fees are low, effectively suggesting that revenue cannot be up if CT wants cheaper transaction costs.

This is false.

If processing a transaction costs the network $0.10, optimizing the network for a transaction cost passed onto users at $0.20 ensures that the chain completely pays its expense costs and stays profitable.

Fees are expected to scale with costs, otherwise, what are you really doing?

If the Ethereum community wants to turn the chain into some community-funded open-source project, it can very much be done, otherwise, revenue is a very important metric to look at.

All that censorship-resistance collateral and money talk is nonsense if it isn't leading to cash flow to not only pay for Ethereum's security budget but also go towards funding further network developments.

Saying that revenue doesn't matter is just cope and saying that cheap transactions will result in unprofitability for a chain and that should be accepted is just ignorance.

Am I saying that Ethereum is dying or dead?

Neither. Debates like this are what ensures that the chain doesn't actually go to shit. L1s need to be profitable for its native assets to be truly censorship-resistance collateral and money, hence revenue is important.

Posted Using INLEO