• Ethereum’s revenue in the first quarter of 2024 reached $365 million, a 200% increase from Q4 2023, setting the network on a path to achieve $1 billion in annual profits.
• Increased DeFi activities significantly contributed to a surge in Ethereum’s transaction volumes, with daily transactions in 2024 nearing the all-time high recorded in 2021.
• The introduction of U.S. Bitcoin ETFs and the anticipated Bitcoin halving are expected to catalyze a bullish phase for cryptocurrencies.

According to The DeFi Report analyst Michael Nadeau, Ethereum raked in $365 million in revenue in the first quarter of 2024. This is up from the $123 million in profits recorded in the last quarter of 2023, representing a 200% growth. With this trajectory, Ethereum is on course to reach $1 billion in annualized profits, following a year-on-year quarterly revenue surge of 155%.

The network’s fee revenue was a major contributor to this growth, totaling $1.17 billion for the quarter. This marks a 155% increase from the first quarter of 2023 and an 80% rise from the previous quarter. Per Nadeau, the growth was driven by a “surge in DeFi activity during the quarter.”

Transaction volumes on Ethereum have notably increased, with over 1.15 million average daily transactions already recorded in 2024. These figures not only surpass the total from 2023, which stood at 1.05 million but are also approaching the peak of 1.25 million transactions last seen in 2021.

Launched in 2015, the Ethereum network saw a record high of $9.9 billion in revenues in 2021. However, it wasn’t until 2023 that the network saw a profitable year, earning $623 million. 

According to Nadeau, the key propellant has been the shift to a proof-of-stake consensus mechanism in September 2022. The transition reduced token incentives for miners—now validators—by about 80% and was pivotal in improving profitability.

Nadeau also highlighted that since 2017, Ethereum’s fees have been growing at an average rate of 58% annually. Looking forward, he anticipates that the crypto market will “outperform everything else.” 

The analyst expects this scenario to play out aided by rising liquidity conditions for the “next few years.” He anticipates that the United States has a large debt that needs refinancing in 2024, adding that the market has priced in three rate cuts from the Federal Reserve. This is expected to provide a “tailwind” for risk assets like cryptocurrencies.

Additional positive factors for the cryptocurrency sector include the launch of U.S. spot Bitcoin exchange-traded funds (ETFs), the anticipated Bitcoin halving event on April 20, and what Nadeau terms the “innovation cycle.” These elements will facilitate broader cryptocurrency adoption and potentially initiate a bull market phase, the analyst added. 

The Bitcoin ETFs are seen as a major step in broadening crypto access and interest. Since their inception, they have drawn massive liquidity from institutional players, prompting a broader surge within the crypto market. 

Nadeau expects that similar to previous cycles, Bitcoin will initially lead in gains during the early stages of the bull market, with Ethereum and other altcoins surpassing it as the cycle progresses. He noted that altcoins that have demonstrated “clear product market fit” are likely to sustain this outperformance.