Q3-24 Installment

1
Table of Contents (click to jump to each section)
Operating Performance…………………………………………………………………………………………………………….3

Token Economics………………………………………………………………………………………………………………………13

Stablecoins……………………………………………………………………………………………………………………………….23

DeFi………………………………………………………………………………………………………………………………………….31

Onchain P&L…………………………………………………………………………………………………………………………….36

Valuation………………………………………………………………………………………………………………………………….39

Correlations……………………………………………………………………………………………………………………………..45

Layer 2’s……………………………………………………………………………………………………………………………………54

ETH vs SOL……………………………………………………………………………………………………………………………..…69

Closing Thoughts………………………………………………………………………………………………………………………76
2
 OPERATING
PERFORMANCE

3
 STATS & TAKEAWAYS

• Quarter over Quarter Growth = 2.9%

• Year over Year Growth = 19.6%

• 5-Year CAGR = 32.83%

• Ethereum has more than 2x the number of token

holders as Bitcoin

• In the last two cycles, the ETH price shot through the
token holder growth trendline. If that happened in
this cycle, the ETH price could get to $8-$10k.

Powered by:

Back to Table of Contents 4

 STATS & TAKEAWAYS

• Avg. Daily Active Users on L1 in Q3 = 360k

• Quarter over Quarter Growth = -12.6%

• Year over Year Growth = +9.5%

• Generally speaking, users are migrating to L2 within

the Ethereum ecosystem. There are now 7.5x more
daily active users on L2s than on Ethereum L1

Powered by:

Back to Table of Contents 5

 STATS & TAKEAWAYS

• Avg. daily fees in on L1 in Q3 = $2.8m (lowest

since Q4-20)

• Quarter over Quarter Growth = -47%

• Year over Year Growth = -41%, largely due to

EIP4844 upgrade

• Q3-24 vs Q4-21 (peak of last cycle) = -93%

• Avg. fees/day 2 years prior to EIP4844 = $7.4m

• Avg. daily fees since EIP4844 = $4.9m

• Largest driver of fees = DEX trading & Stablecoin

payments

Powered by:

Back to Table of Contents 6

 STATS & TAKEAWAYS

• Fees/daily active address in Q3 = $8.20

• Quarter over Quarter Growth = -38%

• Year over Year Growth = -46%

• In 2021, avg. fees per daily user peaked at $68

• Avg. fee/daily users since EIP4844 = $12.54

• Fees per user dropping is ok, as long as the network

can onboard millions of new users to backfill the glut
of blockspace due to EIP4844

Powered by:

Back to Table of Contents 7

 STATS & TAKEAWAYS

• Avg. tx/day in Q3 = 1.12m

• Quarter over Quarter Growth = -4.3%

• Year over Year Growth = 10%

• In 2021, Ethereum L1 peaked out at $1.26m tx/day.

In 2024 the avg. is 1.15 tx/day (just 8% off all-time
high)

• Ethereum blocks have been full since 2020. It’s not

the # of transactions that drive onchain economics,
it’s the timeliness of transactions, as users bid up
fees to get their tx included in blocks

Powered by:

Back to Table of Contents 8

 STATS & TAKEAWAYS

• Avg. core devs/day in Q3 = 169

• Quarter over Quarter Growth = -21%

• Year over Year Growth = -9.7%

• Avg. core devs/day peaked in ‘22 at 226

• Data does not include ecosystem devs from L2s, apps,

and protocols built on Ethereum

Powered by:

Back to Table of Contents 9

 STATS & TAKEAWAYS

• Avg. commits/day Q3 = 36

• Quarter over Quarter Growth = -15%

• Year over Year Growth = -31%

• All-time high was 2022 at 108 commits/day

• Code commits reflect activity at the L1 only. As

Ethereum scales, developer activity is shifting to L2s.

Powered by:

Back to Table of Contents 10

 STATS & TAKEAWAYS

• Avg. Contract Deployers/day Q3 = 1,498

• Quarter over Quarter Growth = -2%

• Year over Year Growth = -56%

• Peak avg. deployers/day was 5,618 in ’22

• Data reflects activity at the L1 only. As Ethereum

scales, developer activity is shifting to L2s.

Powered by:

Back to Table of Contents 11

 STATS & TAKEAWAYS

• 34.4k ETH are staked as of 9/30/24 — 28.7% of the

circulating supply

• Quarter over Quarter Growth = 4.4%

• Year over Year Growth = 29.3%

• Over 75% of ETH staked is in liquid staking solutions

(Lido, Rocketpool, Coinbase, etc)

• The ETH staking yield was 3-3.5% during Q3,

trending down on the year due to less fees related
to EIP4844

Powered by:

Back to Table of Contents 12

TOKEN ECONOMICS

13
 STATS & TAKEAWAYS

• Q3 inflation = .112% (annualized to .4%)

• YTD inflation = .048%

• Inflation since EIP4844 = .15%

• Bitcoin inflation rate = .84%

• The drop in inflation each year reflects increasing

demand for Ethereum based services. As demand
increases, user fees (rather than new token issuance)
pay the supply side of the network (the validators).

Powered by:

Back to Table of Contents 14

 STATS & TAKEAWAYS

• Avg. daily issuance in Q3 = 2,635 ETH

• Quarter over Quarter Growth = 3.3%

• Year over Year Growth = 31.1%

• Avg. daily burn in Q3 = 638 ETH

• Quarter over change in burned supply = -47%

• Year over Year Change in burned supply = -71%

• In ’21, the network averaged 8,882 burned ETH per

day. The reduction in 2024 is due to EIP4844.

Powered by:

Back to Table of Contents 15

 STATS & TAKEAWAYS

• Total burned supply as of 9/30 = 4,393,117 ETH

• Quarter over Quarter Growth = 1.3%

• Year over Year Growth = 21.2%

• Burned ETH accrues value to ETH token holders

• Ethereum “burns” the base fee of each transaction,

which represented 61% of all transaction fees paid in
Q3, down from 71% in Q2

Powered by:

Back to Table of Contents 16

 STATS & TAKEAWAYS

• Avg. transactions/day in 2024 = 1.15m

• More transactions can result in more burned ETH if

the timeliness of the transactions is such that users
drive up network fees, resulting in more burned ETH

Powered by:

Back to Table of Contents 17

 STATS & TAKEAWAYS

• ETH balances on exchanges is at its lowest level

since 2016

• This is an indication that the utility and capital

efficiency of ETH is increasing over time as users
put their ETH to work onchain

Powered by:

Back to Table of Contents 18

 STATS & TAKEAWAYS

• ETH supply in smart contracts is currently at an all-

time high — the reflection of ETH balances on
exchanges at its lowest point since 2016

• ETH balances moving from exchanges to onchain

shows that there are more apps and things to do
within the network, which is increasing the capital
efficiency of ETH

Powered by:

Back to Table of Contents 19

 STATS & TAKEAWAYS

• The ETH Stake Rate finished the quarter at 3.2%

• Quarter over Quarter Growth = 3.1%

• Year over Year Growth = -11.2%

• Factors impacting the ETH Stake Rate include: total

ETH staked, total user fees paid, MEV, and token
incentives

• The ETH stake rate is the heartbeat of Ethereum and

can be viewed similarly to treasury yields in TradFi,
with the caveat that the ETH stake rate is not risk
free

Powered by:

Back to Table of Contents 20

 STATS & TAKEAWAYS

• Ethereum’s staking yield is trending down as network

fees were down 47% in Q3 and 41% in Q2

• All things equal, if fees increase, the ETH yield will

increase proportional to the increase in fees

Powered by:

Back to Table of Contents 21

 STATS & TAKEAWAYS

Supply held by wallets with:

• 1-10 ETH = 3.2%

• 10-100 ETH = 6.2%
• 100-1,000 ETH = 7.4%
• 1,000-10,000 ETH = 10.4%
• greater than 10,000 ETH = 13.9%

*includes externally owned accounts only (does not include

ETH held in exchanges or smart contracts)

Powered by:

Back to Table of Contents 22

STABLECOINS

23
 STATS & TAKEAWAYS

• USDC and USDT volume on Ethereum L1 were

each down 2% in Q3

• Year over year, USDC grew its volume 40%, USDT

grew 43%

• The fastest growing stablecoin in terms of

volume was Paypal, growing 114% during the
quarter

• DAI volume was up 54% in Q3, and 1,305% over

the last year

Powered by:

Back to Table of Contents 24

 STATS & TAKEAWAYS

• USDC is dominating on L2s so far, growing 153% in

Q3 and 519% over the last year

• USDC did 10x USDT’s volume on L2s during Q3

• USDT grew 13.8% in Q3, and 120% over the last

year

• The vast majority of USDC volume is on Base, which

did $414b in Q3 compared to $128b on Arbitrum,
and $39b on Optimism

Powered by:

Back to Table of Contents 25

 STATS & TAKEAWAYS

• Total stablecoin supply on Ethereum L1 grew

4.3% in Q3 and 25% over the last year

• The fastest growing stablecoin is Circle’s EURC —

up 21% during the quarter

• USDC grew it’s supply 9% on the L1 during the

quarter and USDT grew 5.2%

• An increasing stablecoin supply is generally

bullish for onchain activity and crypto asset prices

Powered by:

Back to Table of Contents 26

 STATS & TAKEAWAYS

• Stablecoin supply on the top L2s grew 15% in Q3

and 294% over the last year

• USDC now has $5.2b on L2s, with 65% of that on

Base

• USDT now has $4.1b on L2s, with 69% on

Arbitrum

• DAI currently has just $64m on L2s, with 60% on

Arbitrum

Powered by:

Back to Table of Contents 27

 STATS & TAKEAWAYS

• Avg. daily active stablecoin users on Ethereum L1

was 85k in Q3, up 2.4% over Q2 and 35% over the
last year

• The fastest growing stablecoin was Paypal in Q3,

with avg. daily users up 41% over Q3

• USDC grew active users 3.5% during the quarter,

and USDT grew 2.7%

Powered by:

Back to Table of Contents 28

 STATS & TAKEAWAYS

• Total avg. daily active stablecoin addresses were

down 26% in Q3

• USDC saw the largest decline, down 30%, followed

by DAI dropping 29% and USDT 16%

• USDC averaged 88k stablecoin users in Q3, with

38% on Base, 28% on Arbitrum, and 34% on
Optimism

• USDT averaged 42k active stablecoin users per day

in Q3 on the L1. 77% are on Arbitrum.

Powered by:

Back to Table of Contents 29

 STATS & TAKEAWAYS

• Stablecoin transfers on ETH L1 were up 11% in Q3

and 57% over the last year

• The fastest growing stablecoin was Paypal, up 47%

in terms of # of transfers

• USDC grew its # of transfers 10.7% in Q3 and 90.8%

over the last year

• USDT grew 10.9% in Q3 and 44.4% over the last

year

Powered by:

Back to Table of Contents 30

DeFi

31
 STATS & TAKEAWAYS

• DEX volumes on L1 were down 24% during Q3 but up

69% over the prior year

• Combined volumes on the top L2s grew 5% during Q3

and 303% over the last year

• The fastest growing chain in terms of DEX volumes is

Scroll, growing 58% during the quarter

• Arbitrum was up 11% on the quarter, Base was up 15%,

and Optimism was down 25% on the quarter

Powered by:

Back to Table of Contents 32

 STATS & TAKEAWAYS

• Active loans are down 6.5% in Q3 but up 160%

on the year

• Aave was flat for the quarter, but has seen it’s
active loans grow over 200% over the last year

• Aave controls 73% of the market on L1 today.

Spark is #2 with a 14% market share.

Powered by:

Back to Table of Contents 33

 STATS & TAKEAWAYS

• Total TVL dropped 14% in the quarter but is up 133%

over the last year

• ETH L1 was down 16% on the quarter, but up 127%

over the last year

• Combined TVL on the top L2s was up 1% on the

quarter and 180% on the year

• The fastest growing L2 in terms of TVL is Base,

growing 42% on the quarter, nearly catching
Arbitrum with $2.2b as of 9/30/24

Powered by:

Back to Table of Contents 34

ONCHAIN PROFIT &
LOSS

35
Powered by:

Back to Table of Contents 36

Powered by:

Back to Table of Contents 37

Takeaways: L1 Financials
• L1 fees in Q3 were the lowest the network has seen since Q4-20

• The decrease is due to the growth of L2s, the introduction of EIP 4844, and lack of new users coming into
crypto in Q3

• Optics look bad in the short run, but in the long run we expect to see the new supply of block space back
filled by new use cases that exponentially grow transaction volume, demand for ETH, and settlement
fees to ETH L1

• ETH holders were diluted during Q3 as the network issued more ETH than was burned

• Stakers earned $526m in Q3 as the token incentives that diluted ETH holders were paid to ETH
stakers/validators

Back to Table of Contents 38

VALUATION

39
 STATS & TAKEAWAYS

• Ethereum’s price to fee ratio is currently 260

• Price to fee = FD valuation divided by last 30 days of

fees, annualized. Price to fees is equal to price to
sales in traditional finance

• Ethereum’s price to fee ratio increased 10.7% in the

quarter and 48% over the last year

• The all-time low price to fee ratio was in Sept. of

2020 at 17

• The all-time high price to fee ratio was 1,600 in

October of ’17

• For reference, Solana’s price to fee ratio was 331 on

Powered by: 9/30/24

Back to Table of Contents 40

 STATS & TAKEAWAYS

• Ethereum’s price to TVL is currently 6.4, the lowest its

been since late ‘22

• The all-time low was established in June of ‘22 at 3.7

• For reference, Solana’s price to TVL is currently 16.4

Powered by:

Back to Table of Contents 41

 STATS & TAKEAWAYS

• Price to stablecoin market cap measure the FD

valuation vs stablecoin market cap on any given day

• Ethereum currently has a price to stablecoin market

cap of 3.8, down from a peak of 6 earlier this year as
stablecoin supply has grown while the market sold off
after the rally in May

• For reference, Solana has a price to stablecoin market

cap of 24.9 on 9/30/24

Powered by:

Back to Table of Contents 42

 STATS & TAKEAWAYS

• Ethereum’s price to active users is currently

922,708x

• Ethereum’s price to active users has been trending

up since ‘22 as the number of active users is
relatively constant with growth on L2s. As such, as
the market cap grows, the ratio grows.

• For reference, Solana’s price to daily active addresses

is 23,400x — orders of magnitude lower than
Ethereum as all of Solana’s users are on the L1 vs
scattered across L2s on Ethereum

Powered by:

Back to Table of Contents 43

 STATS & TAKEAWAYS

• Ethereum’s Price to DEX volume is currently 265x,

approaching a 4 year high

• With DEX volumes moving to L2s, we should

anticipate this number to continue to grow in the
coming months and years

• Solana’s Price to DEX volume is currently 110x —

highlighting the fact that Solana has largely caught
up to Ethereum in terms of DEX volumes yet still has
a much smaller market cap

Powered by:

Back to Table of Contents 44

CORRELATIONS

45
 STATS & TAKEAWAYS

• The Nasdaq outperformed ETH in Q3, gaining

2.6% while ETH was down 21.3% on the quarter

• The 1 year return for the Nasdaq = 37.6% vs

59.4% for ETH

• 3 year returns for the Nasdaq = 25.8% vs -11.3%

for ETH

• 5 year returns for the Nasdaq = 127% vs 1,374%

for ETH

Powered by:

Back to Table of Contents 46

 STATS & TAKEAWAYS

• ETH’s all-time correlation coefficient with the

Nasdaq is .26 (generally uncorrelated)

• We can see that the correlation was strongest in

March of 2020 (covid sell off) and in March of ‘22
(when risk assets sold off as the Fed started
hiking rates)

• Correlations tend to collapse to 1 across all

assets during extreme conditions. However, ETH
is generally uncorrelated to US equities outside
of these extreme events.

Powered by:

Back to Table of Contents 47

 STATS & TAKEAWAYS

• The S&P 500 outperformed ETH in Q3, gaining

5.5% while ETH was down 21.3% on the quarter

• The 1 year return for the S&P 500 = 34.3% vs

59.4% for ETH

• 3 year returns for the S&P 500 = 33.7% vs -11.3%

for ETH

• 5 year returns for the S&P 500 = 93.5% vs 1,374%

for ETH

Powered by:

Back to Table of Contents 48

 STATS & TAKEAWAYS

• ETH’s all-time correlation coefficient with the S&P

500 is .25 (generally uncorrelated)

• We can see that the correlation was strongest in

March of 2020 (covid sell off) and in March of ‘22
(when stocks sold off as the Fed started hiking rates)

• Correlations tend to collapse to 1 across all assets

during extreme conditions. However, ETH is
generally uncorrelated to US equities outside of
these extreme events.

Powered by:

Back to Table of Contents 49

 STATS & TAKEAWAYS

• The Blackrock BAGPX 60/40 portfolio outperformed

ETH in Q3, gaining 4.4% while ETH was down 21.3%
on the quarter

• The 1 year return for the Blackrock60/40 portfolio =

20.3% vs 59.4% for ETH

• 3 year returns for the Blackrock 60/40 portfolio =

-1.04% vs -11.3% for ETH

• 5 year returns for the Blackrock 60/40 portfolio =

23.2% vs 1,374% for ETH

Powered by:

Back to Table of Contents 50

 STATS & TAKEAWAYS

• ETH’s all-time correlation coefficient with the

Blackrock 60/40 portfolio is .17 (generally
uncorrelated)

• We can see that the correlation was strongest in

March of 2020 (covid sell off) and in March of ‘22
(when stocks and bonds sold off as the Fed started
hiking rates)

• Correlations tend to collapse to 1 across all assets

during extreme conditions. However, ETH is
generally uncorrelated to US equities and bonds
outside of these extreme events.

Powered by:

Back to Table of Contents 51

 STATS & TAKEAWAYS

• BTC outperformed ETH in Q3, gaining 2.2% while

ETH was down 21.3% on the quarter

• The 1 year return for BTC = 137% vs 59.4% for ETH

• 3 year returns for BTC = 46.3% vs -11.3% for ETH

• 5 year returns for BTC = 674% vs 1,374% for ETH

Powered by:

Back to Table of Contents 52

 STATS & TAKEAWAYS

• ETH’s all-time correlation coefficient with BTC is .67

(highly correlated)

• Correlations tend to weaken later in crypto cycles,

when ETH and altcoins tend to outperform BTC

Powered by:

Back to Table of Contents 53

LAYER 2s

54
 STATS & TAKEAWAYS

• Active users on the top L2s grew 15% in Q3 and

222% over the last year

• The fastest growing L2 is Base, which increased

its active users 128% in Q3, averaging 26.8m
users/month during the quarter

• Arbitrum was number two, with 14m

users/month in Q3

• In total, there were 2.3m daily active users on

average across the top L2s in Q3, 6.3x that of
Ethereum L1

Powered by:

Back to Table of Contents 55

 STATS & TAKEAWAYS

• Base is clearly the fastest growing L2 today with

active users growing 128% during the quarter

• Base averaged 872k users/day in Q3. Arbitrum was

#2 with 455k users/day

• Base also has a higher retention rate, with users

returning to smart contracts on Base more often
than any other L2

Powered by:

Back to Table of Contents 56

 STATS & TAKEAWAYS

• The top L2s combined for $7.2m in fees per day

in Q3, down 64% from Q2

• The drop in fees is primarily due to EIP4844,

which lowered fees for users. This is a positive
trend for developers, which will need to create
new apps to onboard millions more users. If
successful, this will increase velocity, and
ultimately backfill the loss in fee revenue
experienced over the last quarter.

• The top L2s combined for about 8% of the daily

fees process on L1 during the quarter

Powered by:

Back to Table of Contents 57

 STATS & TAKEAWAYS

• Base is the top performing L2 in Q3, generating

$79k/day on average. However, this was down
70% from Q2.

• Arbitrum averaged $39k in fees/day in Q3,

down 51% from Q2. Optimism was #3 with
$31k/day, down 67% from last quarter.

• Starknet produced the fewest fees during the

quarter, averaging just $760/day, down 53%
from Q2.

Powered by:

Back to Table of Contents 58

 STATS & TAKEAWAYS

• L2 fees as a % of Ethereum have been on the decline

ever since the bull run kicked off in late ‘23

• The reason is twofold: 1) more users came back to L1,

driving up avg. fees paid, 2) EIP4844 lowered fees
significantly for L2s when it was implemented in
March of this year

• TVL, active users, transactions, and developers are all

growing on L2s despite the drop in fees

Powered by:

Back to Table of Contents 59

 STATS & TAKEAWAYS

• Cost of revenue for L2s = the settlement and

data availability fee paid to Ethereum L1

• We can see that these fees dropped off a cliff in

March of this year when EIP4844 was
implemented

• This has significantly improved L2 margins to

nearly 99%

Powered by:

Back to Table of Contents 60

 STATS & TAKEAWAYS

• This data set is looking at total fees vs fees paid to

Ethereum L1 for settlement/data availability

• L2 margins pre-EIP4844 were roughly 75%

• Post EIP4844 margins are now nearly 90%+ and

nearly 99% for some L2s

Powered by:

Back to Table of Contents 61

 STATS & TAKEAWAYS

• Combined daily transactions on L2s averaged 9.9m

in Q3, up 11.6% on the quarter

• L2s now combine for over 8.8x the average daily

transaction on Ethereum L1

• The largest driver of transaction on both L1 and L2s

come from DEX trading and stablecoin payments

Powered by:

Back to Table of Contents 62

 STATS & TAKEAWAYS

• The fastest growing L2 was Base, averaging 4m

transactions/day, which grew 51% over Q2

• Arbitrum 1.8m transactions/day in Q3 and Blast

was #3 with 731k tx/day during the quarter

• Linea was #4 with 620k/day, Immutable was #5

with 596k/day, followed by Optimism with 594
tx/day in Q3

Powered by:

Back to Table of Contents 63

 STATS & TAKEAWAYS

• Cost per transaction on L2s was 5 cents on average

across all L2s during Q3

• Ethereum L1 avg. cost/transaction was $2.58 during

the quarter

• The average fee on Base and Arbitrum during the

quarter was 2 cents

• We’ll be monitoring the avg. cost/transaction in the

coming months and quarters as new users coming
onchain could cause spikes in fees at both the L2
and L1 level

Powered by:

Back to Table of Contents 64

 STATS & TAKEAWAYS

• TVL across all L2s is $8.3b as of 9/30/24, 17% of the

value still on Ethereum L1

• Arbitrum leads with just over $2.5b, followed by Base

and Scroll

• In 2024, 83% of the value that left L1 for L2s

ultimately has made it back to L1. This indicates that
users still prefer to store their value on the L1 as it is
more secure, decentralized, and battle-tested than
the L2s.

Powered by:

Back to Table of Contents 65

 STATS & TAKEAWAYS

• Over 5.7m contracts were deployed per month

on average across the L2s in Q3, 10.5x that of
Ethereum L1

• Base is dominating with a 78% market share

across the L2s in terms of contracts deployed

• #2 is OP Mainnet, with 442k contracts

deployed/month on average during Q3

• Manta Pacific averaged the fewest number of

contracts during the quarter with just
37k/month on average

Powered by:

Back to Table of Contents 66

 STATS & TAKEAWAYS

• In terms of L2s with tokens in the market, Arbitrum

has the most holders with 1.35m, up 11% in Q3 and
100% over the last year

• Optimism is #2 with 1.2m holders, up 3% in Q3 and

23% over the last year

• For reference, Ethereum has over 127m token

holders as of 9/30/24

• Immutable has 92k holders and grew 6% in Q3 while

Mantle now has 20k users and grew 11% during Q3

Powered by:

Back to Table of Contents 67

 STATS & TAKEAWAYS

• In terms of Market Cap to TVL, Arbitrum is the

most reasonably priced L2 within the ecosystem
today

Powered by:

Back to Table of Contents 68

ETH vs SOL

69
 STATS & TAKEAWAYS

• Solana did $124b of Dex volume in Q3, up 14% from

Q2 and 3325% over the last year

• Solana’s DEX volume during the quarter represented

47% of the volume on Ethereum + the top L2s

• Solana’s DEX volume as a % of Ethereum + top L2s

was 36% in Q2, and just 3% one year ago

• DEX volumes on Ethereum + the top L2s was down

12% in Q3, but up 135% over the last year

• The fastest growing L2 in terms of DEX volumes is

Base, with $45b of volume in Q3 (36% of Solana)
Powered by:

Back to Table of Contents 70

 STATS & TAKEAWAYS

• Solana did $645b of stablecoin volume in Q3, down

86% from Q2, but up 1,488% over the last year

• Solana’s volume was 22% of Ethereum + the top L2s

for the quarter ($2.9 trillion)

• Stablecoin volume on Ethereum + the top L2s was up

16% in Q3 and 203% over the last year

• The fastest growth is occurring on Base, which did

$414b in Q2 (64% of Solana), growing 323% in Q3
and 7,913% over the last year

• Ethereum L1 did 3.2x the total stablecoin volume

Powered by: processed on L2s during the quarter

Back to Table of Contents 71

 STATS & TAKEAWAYS

• Solana had 78 active core developers in Q3, up

45% over Q2

• By comparison, Ethereum + the top L2s averaged

496 active core devs during the quarter, down
7.9% from Q2, but up 13% over the last year

• zkSync is the fastest growing L2 in terms of active

core devs, growing 14% in Q3

Powered by:

Back to Table of Contents 72

 STATS & TAKEAWAYS

• Solana averaged 2.5m active addresses during

Q3, up 80% over Q2 and 928% over the last year

• Ethereum + the top L2s averaged 3.2m users/day,

up 19% in Q3, and 192% over the last year

• On average, Solana had 78% of the active users

on Ethereum + the top L2s during Q3

Powered by:

Back to Table of Contents 73

 STATS & TAKEAWAYS

• Solana averaged $1.1m in fees/day in Q3, down

28% from Q2, but up 2,583% over the last year

• By comparison, Ethereum + the top L2s averaged

over $3m in fees/day, which was down 49.6% for
the quarter and 44% over the last year — largely
due to EIP4844

Powered by:

Back to Table of Contents 74

 STATS & TAKEAWAYS

• Cost to produce $1 of fee revenue is calculated as

total token incentives for the period divided by
total fees

• The pattern of high to low over time shows the

natural progression that L1s must go through on
their path to onchain profitability

• Ethereum has the clear advantage today as it takes

much less token inflation to compensate the supply
side of the network (the validators)

Powered by:

Back to Table of Contents 75

Back to Table of Contents 76
CLOSING THOUGHTS

77
Is ETH Dead?
• If you’ve read The Ethereum Investment Framework, you know • We view L2s as a complement to ETH (the asset) because they use the
that we expected to see fees on the network drop as a result of ETH for gas fees/settlement. Typically when the price of a product or
EIP4844, and to some extent, the introduction of Celestia and service drops (in this case, L2 fees), demand for its complement
cheaper data availability networks. That’s exactly what’s increases (in this case, ETH).
happening now.
• In addition to increasing demand for ETH, L2s can ultimately scale the
• The optics don’t look great. Fees are down. Inflation is up. volume of transactions (and settlement fees paid to Ethereum) that
Uniswap (controls 20% of gas fees to Ethereum validators) is now should ultimately back fill the glut of block space supply that is available
building their own L2. today.

• But the reality is that L2s are the only way the network can scale. • We’ll be monitoring progress on these fronts in the coming quarters.
Ethereum’s primary job is to secure the L2s, export ETH to as In summary, ETH is not dead.
many chains as possible, and capture settlement fees + security
as a service fees (restaking).

• While fees are dropping on Ethereum (and L2s), the key item to
watch for is demand for ETH. On L2s. In DeFi. As a store of value.
This is ultimately what matters in the long run.

Back to Table of Contents 78

Follow our Research & Analysis
• www.thedefireport.io

• Twitter: @JustDeauIt

• LinkedIn: Michael Nadeau

• The Signal Podcast: https://bit.ly/3SeyyA8

Back to Table of Contents 79