The Ethereum blockchain has made impressive profits so far this year as crypto markets rallied and network usage increased, along with transaction fees.
It may sound counter-intuitive that a decentralized network can generate a profit, but that is exactly what Ethereum has done so far this year.
According to an April 18 Token Terminal report, the Ethereum blockchain generated a $369 million profit in the first quarter of 2024.
If this level of profit is sustained, the blockchain could generate around $1.5 billion for the year.
Ethereum Blockchain Profitable
Token Terminal explained that Ethereum’s revenue model is based on network fees, which are the gas users pay for making transactions. Gas costs spiked in early March but have now fallen back to yearly lows.
Moreover, a portion of the ETH is burned and removed from circulation for every transaction. This accrues to the economic benefit of existing ETH holders since issuance becomes deflationary during times of high demand.
There are also ‘expenses,’ which is the issuance of new ETH to the network’s validators and stakers as an additional economic reward.
“The difference between the daily USD value of the burned ETH (revenue) and the newly issued ETH (expenses) represents the daily earnings for existing ETH holders,” it explained.
Crypto investor and Etherean Ryan Sean Adams said that Ethereum wasn’t like other blockchains. Over the past 18 months, Ethereum generated almost $1 billion in earnings, he added.
“This puts Ethereum in the top 20 entities globally in terms of buyback yield at 0.23%. Ethereum is only 9 years old. ETH should be over $10k based on this alone.”
On April 19, venture capitalist Tomasz Tunguz told his 98,000 X followers that Ethereum “was the most profitable software company in Q1 2024.”
Ethereum generated $370 million in profit on $825 million in revenue for about a 45% net income margin, he added.
“If Ethereum were to trade on the New York Stock Exchange or the NASDAQ, it would top the net income margin (%) charts, with Microsoft, Adobe and Veeva thereafter.”
ETH Price Slides
Nevertheless, ETH markets were getting no love last night, with the asset dropping below $3,000 for the first time in two months.
However, the trend started to change in the following hours, and ETH, alongside the rest of the market, bounced off to about $3,100 as of now.
Still, the asset has now retreated almost 25% from its 2024 peak and remains down 38% from its 2021 all-time high.