As the crypto bull market shifts into altcoin season, Ethereum (ETH) appears to be running out of time to prove its relevance. Since the rally began at the end of 2023, ETH has been under intense scrutiny. Yet over the past year, it has struggled to meet market expectations. Numerically, ETH has seen a peak gain of around 170% since October 2023—failing to sustainably break above the $4,000 mark. In contrast, Bitcoin (BTC) has surged over 300%, while Solana (SOL) has skyrocketed more than 1,300%. Once seen as the bellwether for altcoin season, Ethereum now seems to lack momentum as established altcoins enjoy explosive short-term gains.
Is Ethereum, the so-called "King of Blockchains," undervalued—or is this performance exactly what the market anticipated? Is this a case of an aging champion still holding strength, or has it simply lost its edge?
Stagnant On-Chain Metrics: A Year of Plateau
On-chain data reveals a sobering picture: over the past year, Ethereum has experienced neither significant decline nor meaningful growth. It has largely treaded water.
Daily transaction volume—a key indicator of network activity—paints a story of stability with minor fluctuations. Reviewing the chart of Ethereum’s daily transactions over the past 12 months reveals a flatline with occasional spikes, reminiscent of a steady heartbeat. On December 8, 2023, Ethereum recorded 1.18 million daily transactions. A year later, on December 8, 2024, that figure had only marginally increased to 1.22 million. A brief spike occurred in January 2024, reaching 1.96 million transactions per day, but activity has otherwise remained between 1 million and 1.3 million.
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Gas fees offer an even clearer reflection of on-chain engagement. From late 2023 to early 2024, Ethereum gas prices averaged over 40 Gwei, peaking near 100 Gwei. However, with the rise of competing blockchains like Solana, Ethereum’s gas fees have sharply declined—particularly between July and September, when they dropped as low as 0.3 Gwei. Though there’s been a slight rebound recently, fees typically remain below 20 Gwei. Previously, high gas costs accelerated adoption of Layer 2 (L2) solutions. Now that fees have dropped, the question arises: where have the users gone? Some argue that user migration is precisely what caused this dramatic fee reduction.
Active addresses follow a similar pattern. Data from Ethereum block explorers shows minimal to no growth in daily active Ethereum and ERC-20 addresses—essentially holding steady at pre-bull market levels.
The Great User Shift: From L1 to L2
Where have Ethereum’s users gone? Weekly on-chain data offers clues. A year ago, Ethereum’s mainnet accounted for about 50% of all Layer 2 activity. Today, that share has dwindled to just 24%. Meanwhile, user activity on L2 platforms is rising sharply.
In December 2023, Ethereum mainnet was the most active chain, capturing about 32.48% of total ecosystem activity. By December 2024, the spotlight had shifted to Base, which now commands roughly 50% of activity. Ethereum has fallen to second place with 19%, followed by Arbitrum at 9.2%.
However, when it comes to Total Value Locked (TVL), Ethereum mainnet remains the preferred destination for large capital holders. In December 2023, it held approximately 95% of all stablecoin TVL across the ecosystem. While that share has dipped slightly, it still dominates at around 91%. Notably, TVL is one of the few metrics where Ethereum has seen substantial growth over the past year—jumping from $28.8 billion to $77.5 billion by December 2024, a 2.69x increase. This outpaces ETH’s price appreciation and reflects broader asset value growth during the bull run.
Arbitrum and Base rank second and third in stablecoin TVL among L2s.
In terms of revenue, Ethereum mainnet remains the most profitable chain within its ecosystem. It has consistently captured over 80% of protocol income, reaching 92% by December 8, 2024. Base has emerged as the second-highest revenue generator in the Ethereum ecosystem this year.
Ethereum also maintains dominance in ecosystem market cap—accounting for about 98%. Despite declining on-chain activity, this aligns closely with its TVL share. However, across the broader crypto market, Ethereum’s market cap share has steadily declined over the past year and now stands at just 13.4%.
Despite reduced activity, institutional capital continues to favor Ethereum mainnet. When comparing TVL to active user count, Ethereum boasts the highest “value per user” among all chains—$178,700 per user on mainnet versus $3,315 on Base and $1,972 on Solana. This underscores Ethereum’s unmatched “user value density” within the ecosystem.
Uniswap’s Potential Exodus: A Looming Challenge
Uniswap remains Ethereum’s undisputed top application. On decentralized exchanges (DEXs), Uniswap V2 and V3 together account for over 97% of mainnet trading volume. It also leads Ethereum’s fee burn rankings: in the 30 days leading up to December 9, Uniswap burned 6,372 ETH—more than simple ETH transfers (4,594 ETH).
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But a potential shift could change everything. If Uniswap migrates most of its trading volume to its own chain—Unichain—Ethereum’s on-chain activity and burn rate could plummet. According to Forbes, such a move could cost Ethereum validators $400–500 million annually in lost revenue.
More critically, it threatens Ethereum’s deflationary narrative. Uniswap’s Universal Router is Ethereum’s largest gas consumer—responsible for 14.5% of total fees—and has burned ETH worth $1.6 billion to date.
Core Keywords
- Ethereum (ETH)
- Layer 2 solutions
- Total Value Locked (TVL)
- On-chain activity
- Uniswap
- Gas fees
- Altcoin season
- Blockchain ecosystem
Frequently Asked Questions
Q: Why is Ethereum's price underperforming compared to other altcoins?
A: While ETH remains foundational, newer blockchains like Solana offer faster speeds and lower costs during peak demand. Additionally, much of Ethereum’s user growth has shifted to Layer 2 networks—where activity isn’t always reflected in ETH’s price or mainnet metrics.
Q: Is Ethereum becoming obsolete due to Layer 2 dominance?
A: Not obsolete—but evolving. Ethereum mainnet is transitioning into a settlement and security layer for L2s rather than a primary user-facing chain. Its role is shifting toward institutional-grade liquidity and long-term value storage.
Q: Can lower gas fees hurt Ethereum’s economy?
A: Lower fees improve accessibility but reduce validator income. However, if major protocols like Uniswap stay on mainnet or contribute through other mechanisms (e.g., MEV), fee declines may not significantly impact long-term sustainability.
Q: What would happen if Uniswap fully moves to Unichain?
A: It could drastically reduce Ethereum’s transaction volume and fee burn—undermining its deflationary model. However, Unichain would still rely on Ethereum for security and settlement, preserving some economic ties.
Q: Is high TVL on Ethereum a reliable bullish signal?
A: Yes—especially when paired with strong security and developer activity. High TVL indicates trust and capital commitment, even if daily usage appears stagnant.
Q: Will Ethereum regain its dominance in altcoin season?
A: It depends on ecosystem innovation and adoption of upgrades like EIP-4844 (Proto-Danksharding). If L2s continue growing while feeding value back to mainnet, Ethereum could remain central—even without leading in short-term price rallies.
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The Evolving Role of Ethereum
The data tells a coherent story: Ethereum’s mainnet has plateaued in on-chain activity while losing relative share within its own ecosystem. New users are increasingly opting for L2s or alternative chains like Solana, Sui, and Aptos.
Yet this doesn’t necessarily mean Ethereum is failing—it’s transforming. The mainnet is becoming less a playground for retail users and meme coin traders and more a high-security settlement layer for large institutions and capital-rich participants.
Even with lower gas fees, Ethereum can’t compete with L2s or newer chains on speed or cost for frequent transactions. Instead, it’s doubling down on security and decentralization—the traits that underpin trust in large-scale financial applications.
In this new paradigm, liquidity and security are Ethereum’s final moats. As long as capital flows in and protocols anchor their value to ETH—even indirectly through L2s—its foundational role in crypto remains intact.
The question isn’t whether Ethereum is overvalued or obsolete—it’s whether investors recognize its evolving identity: not as the fastest chain, but as the most trusted one.