Ethereum's fundamentals flash warning signs? Stablecoin supply breaks $165 billion, but revenue plummets by 44%

Ethereum (ETH) prices are approaching $5,000, and stablecoin supply has reached an all-time high, but on-chain revenue has drastically declined by 44% in August. While prices and adoption seem prosperous, fundamental cracks have emerged, casting a shadow on long-term valuations.

Data Divergence: Prices and Supply Reach New Highs, Revenue Declines

(Source: Token Terminal)

Token Terminal's latest data shows that by the end of August, the total supply of stablecoins on the Ethereum blockchain reached $165 billion, a historical high; the price of ETH once touched $4,957 in the same month. However, the network revenue in August was only $14.1 million, a sharp decline of 44% compared to $25.6 million in July, and Gas expenses also fell from $49.6 million to $39.7 million.

This means that even if the price rises alongside the stablecoin circulation, on-chain activity and income are cooling down simultaneously, creating a clear divergence.

Layer-2 Scalability and Transaction Structure Transformation

(Source: Token Terminal)

Analysis points out that the EIP-4844 in the Dencun upgrade significantly reduces the on-chain costs for Layer-2, lowering the transaction fees of scaling networks like Arbitrum and Optimism to less than one-tenth of the mainnet. As a result, the trading activity is rapidly flowing to Layer-2, and the mainnet's revenue naturally shrinks.

Currently, stablecoin settlements account for about 70% of Ethereum's trading volume and 40% of fee revenue, but the profit per transaction is far lower than that of NFT or DeFi operations. Coupled with a further 19.6% drop in NFT sales in August, high-value trading activities have decreased further, putting pressure on mainnet revenue.

Institutional funds support the market, short-term prices remain stable

Despite the decline in on-chain revenue, institutional funds continue to flow into ETH. Etherealize completed a $40 million fundraising in September, and Bitwise's Chief Investment Officer Matt Hougan pointed out that institutions are attracted by the dual advantages of ETH staking yields and decreasing inflation rates.

In addition, ETF applications, staking lock-ups, and repurchase activities have compressed the market circulation of tokens, providing short-term support for ETH prices. However, there is still a pending selling pressure of 570 million USD from whales to be digested in the third quarter, reminding the market that bullish sentiment may face a test.

Long-term Challenge: How Low-Fee Settlement Layers Capture Value

Ethereum is transforming from a "global computer" to a "global settlement layer," sacrificing low fees for high throughput. However, this also means that value capture will increasingly rely on the ETH burn mechanism and staking yield distribution.

If the trading volume continues to migrate away and the income structure becomes overly concentrated, the coin price may ultimately face valuation correction pressure. In the future, whether Layer-2 can reintegrate security into the mainnet and create new fees and application ecosystems will be the key to determining the long-term value of ETH.

Conclusion

Ethereum's data for August reveals a duality of "prosperity and concerns coexisting": stablecoin supply and prices are hitting new highs, but revenue and on-chain activity are both cooling down. Investors who only look at prices may overlook the changes in fundamentals. To assess the long-term trend of ETH, it is essential to continuously track the real economic pulse and value capture ability on-chain.