5 Min. LesezeitKey Takeaways:
DEX’s Dominate Ethereum Usage For the 5th Consecutive Year
Ethereum's transaction fee landscape has noticeably changed throughout 2024, although decentralised exchanges (DEXs) have maintained their spot as the category winner driving usage.
Layer 2 fee contributions have dropped considerably, largely due to the effects of activating EIP-4844 (proto-danksharding), which reduced the data cost of posting to Ethereum’s chain.
NFTs, once a dominant sector, have further declined since their 2021 peak.
Total dollar demand in 2023 and 2024 came out about even, and substantially lower than in 2021 and 2022.
Fee Spend by Contract Is Still Lead by Uniswap
The most heavily used Ethereum contracts in 2024 were Uniswap-related, reinforcing the strong demand for on-chain trading. Interestingly, the fees spent in either moving stablecoins or using DEXs now surpass ETH transfers, showcasing Ethereum's solidifying role as a flexible and financial settlement layer rather than just a simple payment system. In contrast, Layer 2-related fees, which were high in 2023 and early 2024, have since declined due to cost savings introduced by EIP-4844.
Ethereum Supply Burn Has Decreased in 2024
Despite total USD transaction fee spend being comparable in 2023 and 2024, Ethereum’s supply burn was significantly higher in 2023. This discrepancy stems from two factors: gas prices were relatively higher in 2023, and on top of that, ETH’s USD price was generally higher in 2024. With a higher market price in dollar terms, less ETH needed to be burned to reach the same dollar-denominated fee expenditures.
Gas Price Vs. Eth Price Correlation Is Potentially Breaking Down
Ethereum’s gas price has historically shown a strong correlation with ETH’s price cycles. Meaning, periods of high ETH price appreciation coincide with increased network activity and higher gas fees. On the one hand, this is a bit counterintuitive, and perhaps a mark of how developmental crypto platforms are in offering sustainable and mature use cases, that network usage would rise as it becomes more expensive to transact. On the other hand, if ETH price increases are historically mainly a result of speculation, and most of the historical transaction fees in Ethereum being linked to speculative use cases, it might make complete sense.
Over the course of 2024, gas prices never reached the peaks of previous bull markets, and seem to potentially be decoupling from their correlation with ETH USD price. We believe this is a function of changing user behavior with increasing amounts of previously L1-domiciled fees now flowing to Layer 2s and/or alternative platforms. Given one of the main competing factors for blockchain use cases is cost in real purchasing power terms, and dollars are the most easily comprehendible unit of purchasing power, we find it likely that in a more mature setting, metrics like ETH price and Gas Price move separately, possibly around an equilibrium ratio.
Closing Notes
DEXs remain the primary gas guzzlers, solidifying Ethereum’s role in supporting financial services and users' appetite for speculation.
Layer 2 fees have declined, largely due to EIP-4844 providing fee discounts, though overall Layer 2 activity has grown significantly throughout 2024.
NFT transaction fees continue to decline, reflecting a reduced speculative interest in the sector compared to 2021-2022.
ETH supply burn has decreased in 2024, as general on-chain demand has decreased, raising questions about how usage will sustain in an increasingly competitive environment of comparable alternatives and layer-2 systems.
Gas price and ETH price correlation has decreased, as users likely are becoming more sensitive to higher fees in an industry with an increasing number of platforms offering similar applications and assets
Continued Layer 2 adoption and future Ethereum changes may further alter fee dynamics, as we look ahead. However, Ethereum’s core usage as a financially focused settlement layer is likely to persist, with on-chain trading, stablecoins, and general digital assets (ERC-20s) driving the majority of network activity.
