Ethereum's layer-1 generated $88 million in Real Economic Value (REV) during the second quarter, up 7% from the previous quarter but down nearly 70% from the same period last year. The drop comes even as the Ethereum blockchain processes more activity than ever before — a disconnect that's forcing a rethink of the network's long-term value proposition.
The revenue gap
Applications built on Ethereum generated $1.8 billion in fees in Q2. Ethereum itself captured only about 4.9% of that value. The rest went to the apps and, increasingly, to layer-2 rollups that handle the actual user transactions.
Rollups are now processing around 1,270 user operations per second, compared to roughly 20.4 UOPS on the mainnet. Robinhood Chain, a newer L2, reportedly processes almost five times as many operations as Ethereum's layer 1. The mainnet is becoming a settlement and security layer, not the place where most users interact.
Supply and staking dynamics
Total ETH supply sits at approximately 121.88 million. About 41.10 million ETH — 33.7% of the total — is staked in the Beacon Chain, earning a staking issuance yield of around 2.6%. Recent annualized supply growth is about 0.85%, meaning supply is expanding modestly.
Blob fee burn, a key part of Ethereum's deflationary mechanism, has been minimal. Over the past seven days, blob fee burn totaled only 0.22 ETH. That's a far cry from the days when EIP-1559 was burning thousands of ETH daily.
The new thesis
The analyst cited in the report argues that Ethereum's competitive advantage is no longer cheap transactions — it's its position as the leading settlement layer for institutional finance. The value of real-world assets (RWAs) on Ethereum has recently exceeded $17 billion, and the broader stablecoin market is up to almost $300 billion.
According to the analyst, the long-term investment thesis for ETH is shifting from 'more users leading to more fees and more burn' to tokenized finance. In this view, Ethereum's value comes from being the backbone for tokenized assets and institutional settlement, not from competing on transaction costs with L2s.
Open questions
Several key questions remain. Will L2 activity make blob space economically valuable enough to generate meaningful fee burn? Can stablecoins and RWAs produce enough on-chain turnover to drive demand for ETH? And will institutions increasingly hold ETH as reserve collateral?
The analyst remains optimistic about ETH's near- and long-term future and continues to hold and accumulate ETH. But for now, the market is waiting to see whether the institutional thesis can translate into real demand — and whether the numbers will eventually catch up to the narrative.
