The Ethereum blockchain network is on track to generate $1 billion in annual profits, as it reported a Q1 income of $365 million, with a quarterly revenue growth of 155% compared to the previous year. The network’s Q1 2024 profit of $365 million is almost 200% higher than the $123 million profit in Q4 2023, according to a report by The DeFi Report analyst Michael Nadeau. Ethereum’s fee revenue, earned from user transactions, reached $1.17 billion, a 155% increase from Q1 2023 and an 80% increase from the previous quarter.
The surge in activity on the Ethereum network, primarily driven by the increase in decentralized finance (DeFi) activity, was the main reason behind the revenue growth, according to Nadeau. The average daily transactions on the blockchain in 2024 have already surpassed last year’s figures and are nearing the peak results from 2021.
In 2024, there have been over 1.15 million average daily transactions, slightly higher than the 1.05 million in 2023 and close to the 1.25 million recorded in 2021. Ethereum was launched in 2015 but only became profitable in 2023, earning $623 million, despite its revenues in that year being 75% lower than its peak revenues of $9.9 billion in 2021. Nadeau explained that this was mainly due to the shift to a proof-of-stake consensus in September 2022, which resulted in a significant drop in token incentives paid to miners (now validators).
Nadeau also shared his market predictions for the coming years, stating that “crypto will outperform everything else.” He expected liquidity conditions to rise in the next few years, as the United States has a large amount of debt that needs refinancing this year, and the market has priced in three rate cuts from the Federal Reserve. The introduction of U.S. spot Bitcoin exchange-traded funds (ETFs), the Bitcoin halving scheduled for April 20, and the ongoing innovation cycle were three additional factors that Nadeau believes will contribute to a bullish setup in the coming years.
Nadeau believes that Bitcoin and Ether are closely correlated, with Bitcoin outperforming in the early stages of a bull market due to its recognition as the most prominent cryptocurrency. However, in the later stages of the cycle, Ether and other altcoins tend to outperform Bitcoin. Nadeau noted that altcoins rallied significantly in the last two cycles, outperforming Bitcoin throughout the entire duration. He expects this trend to continue, but only for altcoins that have a clear product market fit.