Ethereum aims for $1 billion annual profit as DeFi gains momentum in Q1

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Ethereum is on track to reach a $1 billion annual profit, driven by the surge in decentralised finance (DeFi) activities and the network's robust performance in the first quarter of 2024. In a report by Michael Nadeau, an analyst at The DeFi Report, released on April 17, Ethereum's Q1 income reached an impressive $365 million, representing a 155% year-on-year quarterly revenue growth and a remarkable 200% increase compared to the $123 million profit recorded in Q4 2023.

Ethereum's fee revenue, generated through user transactions, reached a notable milestone of $1.17 billion in Q1, marking a 155% increase from the same period in 2023 and an 80% upswing from the previous quarter.

Michael Nadeau highlighted key insights from the Q1-24 issue of The Ethereum Investment Framework, stating, “ ETH available on exchanges is at its lowest level since 2016, and ETH in smart contracts is at its highest level ever”.

This year, Ethereum's daily transactions have exceeded last year's figures and are nearing the peak observed in 2021. Over 1.15 million average daily transactions were recorded in 2024, showing a slight increase from the 1.05 million seen last year and coming close to the peak of 1.25 million transactions observed in 2021.

Since its launch in 2015, Ethereum didn't achieve profitability until 2023, when it earned $623 million. Despite this milestone, its revenues were 75% lower than the peak of $9.9 billion recorded in 2021. Nadeau explained that this decline is largely attributed to the transition to proof-of-stake consensus in September 2022, resulting in an approximately 80% drop in token incentives paid to miners, now known as validators.

“In terms of token economics, the network’s average daily issuance in Q1 was 2,498 ETH. This was offset by an average of 3,665 ETH burned/day resulting in deflation of -.09% for the quarter (annualised to -.38%)”, Nadeau further stated in the recent report.

Additionally, as of today, due to Israel-Iran tensions, Ethereum's price has continued to drop to $2865 overnight, posing a challenge to the $3000 resistance level. Over the past seven days, Ethereum has experienced a decrease of 12.17%, but today, before noon, it has seen a 4.42% increase, with ETH now standing around $3,100.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash