Yet the economics do not tell the same bullish story just now. Ethereum’s real economic value, or REV, has fallen sharply from the levels reached in 2023 and 2024. REV measures base fees, priority fees, maximal extractable value (MEV) and blob fees associated with Ethereum Layer 1 blockspace. It therefore indicates how much economic value network usage generates for the protocol, validators and ETH holders.

_{Chart: Ethereum’s REV has been trending down over the past few years. Just a bear market phenomenon? | Source: The DeFi Report}

Ethereum’s economy is growing, but remains cyclical

One could argue that this is very much a bear-market phenomenon. When interest in crypto wanes, trading, leverage and speculative activity decline. Fewer transactions are submitted, blockspace becomes less scarce and fee generation falls.

Part of this decline may therefore be cyclical. However, as the second-largest crypto asset by market capitalisation and a leading platform for blockchain-based financial applications, Ethereum is widely expected to evolve beyond its current role as a venue for crypto-related activity. Whether it can reduce its dependence on the crypto market cycle remains a central question for the investment case.

And these expectations are not entirely unfounded. A broader measure of economic activity is the revenue generated by applications and protocols on Ethereum Layer 1. This can be viewed as a rough proxy for Ethereum’s application GDP, measuring economic activity occurring on top of the network.

_{Chart: Ethereum’s application GDP appears to be in a multi-year uptrend | Source: Token Terminal}

As the chart above shows, this activity has expanded over time, although it remains highly cyclical. Stablecoins are the largest application segment on Ethereum. In Q2 2026, Tether and Circle together accounted for a substantial share of the application revenue captured by the dataset, followed by staking, lending, decentralised exchange trading and block building.

_{Table: Leading applications by revenue in Q2 2026 | Source: Token Terminal}

Why economic activity matters for ETH

Economic activity matters because Ethereum’s security and monetary economics are linked to demand for the network. Users pay Layer 1 fees in ETH. Base fees and blob fees are burned, while priority fees and MEV accrue primarily to validators. Sustained demand for Layer 1 blockspace can therefore reduce net issuance and strengthen the case for ETH as a productive monetary asset.

The relationship between Ethereum’s application GDP and the ETH price is visible, but it should not be read as a simple causal equation. Both are influenced by the same underlying forces, including liquidity, risk appetite, collateral values and leverage. Higher prices can stimulate activity, while stronger activity can reinforce the market’s perception of Ethereum’s usefulness. The result is a reflexive system rather than a one-way transmission mechanism.

_{Chart: Ethereum application GDP and ETH price | Source: The DeFi Report}

Real-world assets are the route to more durable demand

Breaking this reflexivity requires a larger share of activity to originate outside crypto. This is why real-world assets matter. Tokenised money market funds, bonds, private credit, equities and other financial claims can introduce demand that is linked to savings, payments, capital markets and balance-sheet management rather than to crypto prices alone.

At the time of writing, Ethereum was the clear leader in real-world asset adoption. Nearly $15 billion of real-world assets were hosted on the network, representing close to half of the on-chain RWA market captured by the dataset below.

Other networks hosting more than $1 billion in real-world assets included BNB Chain, Solana, Stellar, Avalanche and Liquid, a Bitcoin sidechain. Arbitrum, an Ethereum Layer 2, hosted roughly $850 million, while other Ethereum scaling networks held smaller amounts.

_{Chart: Active RWA market capitalisation on Ethereum | Source: DeFiLlama}

Real-world assets moving on-chain are exactly the kind of adoption investors want to see, but the current scale is still too small to change Ethereum’s economics in a meaningful way. More importantly, asset value does not translate mechanically into fee demand. A high-value transfer can require very little data, and an institution can issue a large tokenised fund without generating frequent transactions. The economic significance of an asset and its contribution to Ethereum’s fee market are related, but they are not identical. Ultimately, the velocity at which these assets move matters more for fee generation than their notional value alone.

The Layer 2 problem: activity is growing, but data demand is not scarce

The current gap becomes clearer when we factor in what is happening on Layer 2s. Ethereum’s rollup roadmap moved execution away from the mainchain in order to reduce costs and improve scalability. Layer 2s execute transactions, compress them into batches and publish the relevant data back to Ethereum. Their payment to Layer 1 is often described as rent, which is not fixed but a usage-based fee in ETH.

Most major Ethereum rollups now publish this data through blobs. A blob is a temporary packet of data attached to an Ethereum block. It is not permanent storage and it is not general-purpose execution capacity. Instead, it provides a dedicated form of data availability that allows a rollup’s state to be reconstructed, verified or challenged. In economic terms, blobspace is the standardised data capacity that Ethereum sells to Layer 2s.

The blob fee market is governed by two key parameters. The blob target is the number of blobs per block that the protocol is designed to accommodate on average. The blob maximum is the hard limit for an individual block, allowing temporary demand to rise above the target. When average usage stays above the target, the blob base fee rises. When usage remains below the target, the fee falls towards its minimum.

Blob capacity has expanded considerably since launch. Dencun introduced blobs on 13 March 2024 with a target of three blobs per block and a maximum of six. Pectra, activated on 7 May 2025, raised those parameters to six and nine. Fusaka and two subsequent Blob Parameter Only upgrades increased them first to ten and fifteen in December 2025, and then to fourteen and twenty-one in early January 2026. Ethereum’s targeted blob capacity is therefore approximately 4.7 times higher than when blobs were introduced.

Layer 2 activity may be increasing, but it is not yet increasing quickly enough in data terms to absorb this capacity. With average consumption remaining below the fourteen-blob target for the last few months, blobspace has generally remained inexpensive, and the fees paid by rollups to Ethereum have stayed limited.

_{Chart: Rent paid by Ethereum Layer 2s to Layer 1 | Source: The DeFi Report}

This distinction is central to the investment case. Rollup activity does not automatically generate material fee value for Ethereum simply because more transactions occur on Layer 2s or more notional value is transferred. From rollup activity specifically, Ethereum captures more fee value when rollups consume scarce Ethereum-secured data capacity and compete for it.

A deliberate trade-off, now awaiting proof

As we explained in a previous ARCHIP article, Ethereum’s Layer 2 strategy can, in hindsight, be seen as a deliberate act of self-disruption. The community accepted that activity would migrate away from Layer 1 in exchange for lower costs, a better user experience and greater scalability.

The unresolved question is whether this sacrifice creates greater pricing power later. One possibility is that Ethereum follows the Amazon playbook successfully: Layer 2s capture users and applications, consolidate Ethereum as the dominant settlement and data availability layer, and eventually generate enough demand to pay substantial rent back to Layer 1. In that outcome, low fees are the customer-acquisition tool, not a structural failure.

The alternative is less favourable. Layer 2s may continue to capture most of the economics while becoming increasingly efficient at minimising payments to Layer 1. Activity could flourish across the broader Ethereum ecosystem without producing commensurate value accrual for ETH. Ethereum would then have succeeded as a technology platform while underperforming as an economic asset.

The comparison with Bitcoin

When we compare this with Bitcoin, we can see that the oldest and largest crypto asset by market capitalisation is at a very different stage in its evolution as an asset. Its dominant narrative is monetary: a scarce digital store of value does not need recurring revenue in the same way that a productive platform asset does. Ethereum is valued through a combination of monetary scarcity, staking yield, network utility and fee generation. Its economic activity therefore matters more directly to the asset thesis.

At the time of writing, the data below showed similarly low annualised supply growth for ETH and BTC, at approximately 0.96% and 0.80%, respectively. The difference lies in predictability. Bitcoin’s issuance is programmed to fall again at the next halving, whereas Ethereum’s net supply growth depends partly on network demand because base-fee burning offsets new issuance. That difference is not merely technical. It goes to what each asset is trying to be.

_{Chart: Annualised supply growth of BTC and ETH | Source: Artemis}

Making ETH more Bitcoin-like?

Interestingly, a new draft proposal, EIP-8363, was recently introduced, aiming to align ETH more closely with Bitcoin on this monetary dimension. Called Tapered Issuance Burn, it would burn an increasing share of validator rewards as the staking ratio rises, fully offsetting consensus rewards at roughly 50% staked. The aim is not a Bitcoin-style hard cap. It is to stop the protocol from incentivising market participants to stake ever more ETH, thereby strengthening the monetary properties of unstaked ETH.

Among other reasons, the motivation for this EIP follows from a reflexive feature of Ethereum’s current design. More ETH staked means more total consensus issuance. That increases dilution for holders who do not stake, giving them another reason to stake simply to avoid dilution, which encourages still more staking. Meanwhile, staking is becoming easier as infrastructure matures, liquid staking expands and institutional custodians enter the market. The concern is that Ethereum could eventually pay for more stake than it needs for security while concentrating ETH with large intermediaries.

EIP-8363 tries to break that loop. As staking rises, more validator rewards would be burned rather than paid out. Holding ETH without staking would become less punitive, dilution would fall and more of the benefit would accrue to holders through scarcity. Unstaked ETH could also compete more effectively with yield-bearing staking derivatives as the ecosystem’s base collateral.

This is where the Bitcoin comparison becomes interesting. BTC holders do not need to lock up their coins or take on additional risks to avoid monetary dilution. EIP-8363 would move ETH closer to that holder-first model. But Bitcoin’s monetary proposition remains simpler: a hard supply limit and a pre-programmed issuance schedule that does not depend on staking participation, network activity or changing protocol parameters. Ethereum cannot easily replicate that simplicity or credibility.

Why EIP-8363 remains controversial

What is striking is the degree of opposition the proposal has encountered within parts of the Ethereum community. Critics argue that lower staking yields could make validation less attractive, particularly for smaller operators and solo stakers, increase the relative importance of MEV, and ripple through liquid staking, lending and collateral markets. In on-chain lending markets, liquid staking tokens account for around 40% of deposited collateral, according to TokenLogic. A lower staking yield could therefore have a substantial impact on the DeFi activity built on top of this collateral.

_{Chart: Liquid staking collateral dominates lending TVL. Any change in the staking yield could have far-reaching consequences | Source: TokenLogic}

More fundamentally, Ethereum may not want to beat Bitcoin at being Bitcoin. ETH’s differentiation is that it can be scarce while remaining productive: staked to secure the network and used as collateral across the DeFi, stablecoin and real-world asset economy Ethereum is trying to build. EIP-8363 is directionally interesting because it highlights that Ethereum should not overpay indefinitely for marginal security. But taking staking yield too close to zero may go too far.

For now, EIP-8363 remains a draft proposal. As of the editorial deadline, it was not listed in the official Hegotá Meta EIP as proposed, considered or scheduled for inclusion. To become reality, it would need broader core developer support, formal consideration for a network upgrade, implementation across Ethereum clients, successful devnet and testnet testing, and ultimately inclusion in a mainnet hard fork. The debate will therefore continue.

Importantly, Ethereum is already relatively conservative without EIP-8363: measured across the entire post-Merge period, ETH supply has grown at only around 0.3% per year, below Bitcoin’s current issuance rate and the roughly 1% annual growth in mined gold supply. As shown above, Ethereum’s supply growth has recently been higher. Taking the full post-Merge period into consideration, however, Ethereum still operates one of the least aggressive supply regimes among major monetary assets.

_{Chart: Ethereum’s historical issuance since the Merge in 2022 compared with other monetary assets | Source: TokenLogic}

Important legal information

^{This publication is intended for information and marketing purposes only, and does not constitute investment advice or a specific individual investment recommendation. It is not a sales prospectus and does not constitute a request, an offer, or a recommendation to buy or sell investment instruments or investment services, or to engage in any other transaction. Maerki Baumann & Co. AG does not provide legal or tax advice. Investors are therefore advised to obtain independent legal or tax advice concerning the suitability of such investments, since their tax treatment depends on the personal circumstances of the investor in question and is subject to change at any time. ¬Maerki Baumann & Co. AG holds a Swiss banking licence issued by the Financial Market Supervisory Authority (FINMA). This publication is expressly not intended for persons domiciled in Germany or so-called U.S. persons.}

Editorial deadline: 18 August 2026

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