Ethereum revenue plunges 95% amid Layer 2 shifts

Ethereum’s (CRYPTO:ETH) transaction fee revenue has collapsed by 95% since its Q4 2021 peak, reflecting a seismic shift in network dynamics driven by Layer 2 adoption and waning NFT activity. 

The blockchain’s quarterly revenue fell to $217 million in Q1 2025, down from $4.3 billion four years prior, as users increasingly bypassed mainnet transactions for cheaper alternatives.

Two primary factors underpin Ethereum’s revenue slump: Layer 2 solutions and NFT market contraction.

Layer 2 protocols, which process transactions off-chain before settling on Ethereum’s mainnet, have reduced reliance on high-fee mainnet activity. 

The activation of EIP-4844 further accelerated this trend by slashing data costs for posting to Ethereum’s chain, diminishing Layer 2 fee contributions.

“Layer 2-related fees, which were high in 2023 and early 2024, have since declined due to cost savings introduced by EIP-4844,” a CoinShares report noted.

Meanwhile, the NFT market—once a revenue driver during its 2021 peak—has cooled significantly.

Platforms like OpenSea, which previously recorded billions in monthly trading volume, now see reduced activity, translating to fewer transactions and lower fees.

Ethereum’s price has mirrored its revenue decline, dropping 58.8% from its November 2021 all-time high.

Q1 2025 marked its worst quarterly performance since 2018, with ETH falling 40% during the period.

Over the past month alone, the token shed 25.1%, trading at $1,997 as of March 24, 2025.

While Ethereum’s mainnet revenue has cratered, its ecosystem remains active.

Layer 2 solutions like Arbitrum (CRYPTO:ARB) and Optimism (CRYPTO:OP) continue to grow, though their fee structures bypass mainnet revenue streams.

At the time of reporting, the Ethereum (ETH) price was $2,075.62.