Ethereum on Track to Hit $1 Billion Annual Profits, Spurred by DeFi Activity Surge
Summary:
Ethereum's annualized profits are set to hit $1 billion, thanks to its Q1 2024 profits of $365 million, marking a 200% increase from Q4 2023, according to The DeFi Report. The surge in income is attributed to the 155% increased activity in DeFi, pushing average daily transactions to over 1.15 million. First turning profitable in 2023, Ethereum's growth is largely attributed to the shift to proof-of-stake consensus in 2022 and a growth rate of 58% in fees since 2017. Analyst Michael Nadeau predicts cryptocurrency will outperform other investments due to anticipated US debt refinancing, prospective cuts from the Federal Reserve, Bitcoin ETFs, halving, and an ongoing innovation cycle.
The annualized profits of blockchain network Ethereum are projected to reach $1 billion, having already brought in revenue of $365 million in the first quarter of 2024. Compared to earnings from the last quarter of 2023, this is an almost 200% increase, as reported by The DeFi report analyst Michael Nadeau on April 17th. Ethereum's fee income, accumulating from user transactions, amounted to $1.17 billion, up by 155% from the first quarter of 2023, and 80% more than the final quarter.
A rise in DeFi activity has been the main driver behind this growth, leading to an increase in daily transactions on the network. Transactions for this year are already exceeding those of the previous year, nearing Ethereum's 2021 peak. With an average of more than 1.15 million daily transactions recorded this year, figures slightly exceed last year's daily average of 1.05 million and are nearing the 1.25 million recorded during the 2021 peak.
Ethereum, which was launched in 2015, saw its first profitable year in 2023, earning $623 million, despite that year's revenues being 75% lower than the 2021 peak revenue of $9.9 billion. This profit was largely a result of the transition to proof-of-stake consensus in September 2022, with token incentives paid to miners (now known as validators) decreased by about 80%.
Nadeau stated that Ethereum’s fees have been increasing by 58% annually since 2017. He forecasts that cryptocurrency will surpass all other forms of investment in the coming years. He based this prediction on a number of factors, including the large amount of US debt expected to be refinanced this year and anticipated cuts from the Federal Reserve, which could provide a boost for risk assets such as tech stocks and quality crypto.
Nadeau also cited the launch of US spot Bitcoin (BTC) exchange-traded funds, the Bitcoin halving event, and an ongoing innovation cycle as three additional catalysts signaling a bullish trend in the upcoming years. These Bitcoin ETFs are expected to spur increased interest in cryptocurrencies, while the halving event - scheduled for April 20 - could result in a bull market surge in the following year.
Bitcoin and Ether (ETH) traditionally move in tandem, with Bitcoin often outperforming early in the bull market due to its wider recognition. However, ETH and other altcoins typically surpass it in later stages, and Nadeau predicted this pattern is likely to continue, mainly with altcoins that have a demonstrated product market fit.
Published At
4/19/2024 6:55:22 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.