Ethereum app revenue hits record high, but will ‘economic machine’ fuel next rally?
Coinbase analysts believe that ETH's upside could be capped by BTC dominance.
Key Takeaways
What’s driving Ethereum’s revenue surge?
Mostly stablecoin transactions, led by Tether’s USDT and Circle’s USDC.
Will ETH’s value benefit from the traction?
Tom Lee believes so, but Coinbase analysts still think BTC could dominate in the mid-term.
Ethereum [ETH] is in the news today after it scored a record high in application revenue.
According to Growthepie’s data, the Ethereum mainnet captured $48 million per day on 14 October from apps, surpassing the previous value of $41 million hit in 2022.
On the contrary, the L2s captured 14% of the revenue share, starkly contrasting the view that the sidechains are massively eating into Ethereum’s market share.
Reacting to the update, analyst Joseph Young linked the revenue growth to Ethereum’s “positive flywheel” of scaling. He added,
“It’s a positive flywheel working: high throughput → low fees → more usage → more value. Ethereum isn’t just scaling. It’s accelerating as an economic machine.”
At the time of writing, however, Ethereum’s revenue had slumped to $35 million per day, amid a broader market cool-off.
Ethereum revenue vs other chains
A deeper look into the key growth drivers revealed that half of the revenue came from stablecoin swaps, translating to approximately $46 billion in volume in October alone.
When zoomed out on the broader blockchain ecosystem, Hyperliquid [HYPE] appeared to be still punching above its weight on the app revenue front. In the last 30 days, Hyperliquid netted 30% of the total network revenue, while Ethereum took in 21.5%, according to Blockworks data.
Binance [BNB] came in third place at 16% while Solana [SOL] and Tron [TRX] were tied at fourth with 11%.
On the protocol level, Ethereum’s revenue has been dominated by Tether, Circle, and Sky (formerly Maker).
Will ETH’s price benefit?
Well, the traction and dominance of stablecoins further validates Fundstrat CIO Tom Lee’s bet on Ethereum’s price upside potential via treasury firm BitMine. The firm currently holds 3.4 million ETH to capture the expected growth in stablecoins and tokenization.
However, Coinbase analysts have poured cold water on bullish bets for ETH in the mid to long-term. In their monthly outlook, the analysts noted that the post-October crash could focus on BTC before another rotation occurs.
“We thus anticipate a gradual increase in Bitcoin dominance over the next 2-3 months, which may exert downward pressure on ETH/BTC and alt/BTC pairs before an eventual market rotation.”
