As on-chain activity plummets, Ethereum\u2019s blockspace is on track to turn a financial loss for the first time since the Merge, according to Blockworks data.\u00a0<\/p>\n
Data from Blockworks Research\u2019s newly-launched Analytics product shows that Ethereum blockspace has consistently turned a profit since the network\u2019s switch to proof-of-stake consensus in September 2022.\u00a0<\/p>\n
The blockspace profitability metric is calculated by subtracting the total protocol fees paid to validators as well as ether (ETH<\/a>) reward issuance from total transaction fees.\u00a0<\/p>\n Source: <\/em>Blockworks Analytics<\/em><\/a><\/p>\n From October 2022 to present, only in December 2022 did blockspace narrowly turn a loss, generating $3.5 million in losses \u2014 a fraction of the $414 million in gains the protocol has seen so far in 2023.\u00a0<\/p>\n However, as activity on Ethereum falls, September is shaping up to be the protocol\u2019s first month posting significant losses since proof-of-stake was introduced. Throughout September, Ethereum blockspace has posted only a single profitable day, and as of Monday, has accumulated $15.9 million in losses.<\/p>\n The shift in blockspace profitability coincides with an expansion in ETH\u2019s circulating supply, which is up roughly 8,900 ETH on the month, per data from ultrasound.money<\/a>.\u00a0<\/p>\n The declining profitability for blockspace is attributable to declining user activity and falling volumes across multiple on-chain subsectors. Swaps and transfers of popular stablecoins such as USDT and USDC are down as much as 90% from March 2023 highs, and NFT trading volumes in particular are continuing to dwindle<\/a>.\u00a0<\/p>\n Source: Blockworks Analytics<\/a><\/em><\/p>\n While activity on the base layer is shrinking with no clear catalyst to alter the trajectory, a number of Ethereum layer-2 networks are maintaining healthy activity.\u00a0<\/p>\n Arbitrum and Optimism both maintain sequencer profitability, and while each has seen pullbacks in the number of active addresses on the networks, they remain close to yearly highs.\u00a0<\/p>\n![\"\"](\"https:\/\/lh5.googleusercontent.com\/qi-GRcdNRA1QXXY9KnQ-dmJSJJ0Ijy9Npl-izsixpQoxgq38VJ7ZXKLBXhDqFFtJQZe4OYHJLRhYKniheL8uMY8j_uRvNeWyN968jVbFKjhdK62yCC_eGOoSaZ6-krIXVndN7NlzKUA7JOmNxAwPfpY\")
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