VanEck reports a 16% drop in blockchain earnings for September as reduced volatility and trading volumes impact Ethereum, Solana, and Tron.
Network revenues across major blockchain ecosystems dropped 16% in September, according to asset manager VanEck. Well, the reason behind the decrease was lower market volatility and lower trading volume across major networks. The slowdown was characterised by reduced demand for transactions and less speculation in the crypto markets.
Ethereum, Solana, and Tron Lead Network Revenue Declines
VanEck’s latest report revealed that Ethereum’s network revenue fell by 6% month-over-month. Solana followed with an 11% decline, while the Tron network saw a steep 37% drop. Configure’s August governance proposal, which reduced its gas fees by over 50%, has led to a decline in Tron’s revenue. Although this was a net positive for users, it severely undercut the network’s fee income.
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The report also linked the decline in earnings to decreased volatility in the crypto markets. Ether’s price volatility decreased by 40% in September, while Solana revenue dropped 16% and Bitcoin’s 26%. The decrease in volatility brought a reduction of trades and on-chain activity, thus reducing the amount of fees generated across blockchain networks.
VanEck’s report also highlighted Ethereum’s upcoming Fusaka upgrade, planned for December. The upgrade introduces a way to reduce Layer-2 rollup costs by increasing blob capacity. It will also be more efficient for the network because the nodes can validate blocks based on probabilistic sampling. Analysts believe this could make Ethereum more cost-efficient and scalable, further strengthening its position as a leading Layer-1 network.
The upgrade follows Ethereum’s broader plan to make transaction processing faster and cheaper. Experts believe this will encourage more developers to create dApps and increase the network’s activity. But until volatility returns, revenues may still be under pressure throughout the ecosystem.
Blockchain Fees Fall as Investors Turn Cautious
VanEck said the slower pace in network fees is indicative of a period of consolidation in the larger digital asset market: After a robust first half of the year, global economic uncertainty and changing monetary policies have led to a cautious approach amongst many investors.
Analysts view September’s revenue decline as another indication of stabilization following aggressive activity in the market. Less volatility generally translates into less speculative trading and more buy-and-hold behavior on the part of investors. While this can mean a decrease in network revenues in the short-term, it also indicates a maturing crypto-infrastructure.
VanEck, who is the CEO of VanEck Associates, said the decline in volatility could lead to healthier grounds for sustainable growth. As market stabilizing occurs, blockchain networks may prioritize long-term innovation, rather than transaction spikes for revenue. Ethereum’s Fusaka upgrade and other scalability efforts may help offset these temporary declines in the coming months.
Industry participants feel that as global liquidity starts to improve, volumes will start to recover. This would restore higher network fees and strengthen blockchain revenues across major platforms like Ethereum, Solana, and Tron.
For the CD industry, this is a crucial finding of VanEck that suggests challenges to the existing market model might be less a sign of weakness than a necessary pause as the market continues its path of evolution. As the blockchain ecosystem continues to innovate and optimize, the outlook for the sector seems promising, set to bounce back once more market volatility emerges.
