Ethereum Activity Rises in Q2 Despite Falling Crypto Prices

Ethereum, Solana and Avalanche networks processed increased onchain activity during the second quarter while becoming less expensive to use. The activity growth occurred despite falling cryptocurrency prices, driven by protocol upgrades that expanded blockspace and reduced transaction costs across major chains, according to Bitwise's latest quarterly staking research. Institutional participation continued to lift Ethereum staking to record levels, with exchange-traded funds, corporate treasuries and other large holders accounting for most additional ETH entering the validator pool during the year.

Ethereum Staking Reaches 40.2 Million ETH Record

Ethereum recorded an all-time high of 40.2 million ETH staked, equivalent to about 33% of its total supply. Researchers found institutions accounted for most of the additional ETH entering the validator pool during the year, with growing participation from exchange-traded funds, corporate treasuries and other large holders.

The report noted Ethereum's annualised staking yield was 2.84%, compared with 6.25% for Solana. Most rewards on both networks came from newly issued tokens rather than transaction fees. Rising staking participation has reduced yields by spreading rewards across more participants.

Network Revenues Fall as Protocol Upgrades Cut Transaction Costs

Ethereum's network revenue declined to approximately US$64 million (AU$92.8 million), while Solana's real economic value fell to US$51 million (AU$73.95 million). Network revenues fell sharply even as usage increased because protocol upgrades expanded blockspace and reduced transaction costs, according to the report. Weaker demand contributed in some cases but was not the main reason for the decline.

Avalanche experienced lower revenue despite transaction volume rising by about four times year-on-year following upgrades that significantly reduced transaction costs. The data demonstrated that stronger network usage does not necessarily translate into higher revenue when blockspace becomes significantly cheaper.

FAQ

What happened to Ethereum staking during the second quarter? Ethereum recorded an all-time high of 40.2 million ETH staked, equivalent to about 33% of its total supply, with institutions accounting for most of the additional ETH entering the validator pool during the year.

Why did network revenues fall despite increased blockchain activity? Network revenues fell sharply even as usage increased because protocol upgrades expanded blockspace and reduced transaction costs across major chains, according to Bitwise's quarterly staking research.