The investment case for Ethereum’s native asset, ETH, has long been a topic of debate among investors and analysts. While professional interest in Ethereum as a platform for future applications continues to grow, the fundamental drivers behind ETH’s value remain ambiguous to many. Unlike traditional financial assets with established valuation models, most crypto assets—including ETH—lack universally accepted metrics. This uncertainty raises a critical question: How does growing adoption translate into real, sustainable value for ETH?
In this analysis, we move beyond ideological narratives and focus on measurable, on-chain dynamics that directly influence ETH supply and demand. Our findings point to a clear conclusion: the primary driver of ETH’s value is demand for transactions on the Ethereum network—not staking rewards, monetary adoption, or collateral use.
Ultimately, ETH's worth is tied to how much users are willing to pay for the services Ethereum provides.
Understanding Ethereum Usage: From Transfers to Complex Interactions
Since its inception, Ethereum has evolved from a simple value-transfer protocol into a sophisticated execution layer for decentralized applications (dApps). Early usage centered on peer-to-peer ETH transfers and basic smart contract interactions. However, as developer tooling improved and user demand grew, Ethereum became a hub for complex financial and social systems.
By 2018, transaction fees began reflecting more than just token movements—they were funding interactions with early dApps in finance and gaming like EtherDelta, Idex, and Etheroll. These platforms demonstrated Ethereum’s ability to support multi-step, automated workflows, laying the foundation for today’s composable web3 ecosystem.
👉 Discover how real-world demand shapes digital asset value on a leading blockchain platform.
Since 2020, infrastructure layers such as Layer 2 rollups, bridges, oracles, and MEV (Maximal Extractable Value) systems have become integral to Ethereum’s operation. These components enhance scalability, security, and functionality—but they also shift where and how fees are spent, which has profound implications for ETH’s economic model.
Despite this evolution, one truth remains: a small number of high-fee-use cases dominate overall network activity. And most of them revolve around speculation and asset exchange—not the “world computer” vision once imagined.
Application Interaction: Markets Rule the Ecosystem
When users interact with Ethereum-based applications, the vast majority of transaction fees come from one category: digital asset markets.
As of 2024, over 90% of application-related fees stem from decentralized exchanges (DEXs), with Uniswap alone accounting for approximately 15% of all Ethereum transaction fees in the first half of the year. This dominance underscores a key insight: users primarily turn to Ethereum to trade digital assets—especially long-tail tokens, stablecoins, and ETH itself.
Uniswap’s sustained leadership reflects strong product-market fit. Its permissionless liquidity pools enable seamless swapping of thousands of tokens without intermediaries—directly fulfilling Ethereum’s promise of open financial access.
Other major contributors include aggregators like 1inch, 0x, and wallet-integrated trading via MetaMask Swaps. The emergence of new players like Maestro suggests ongoing innovation and competition within this space.
While NFT marketplaces like OpenSea briefly surged during the 2021 bull run—peaking at $572 million in fees during H1 2022—their influence has sharply declined. In fact, OpenSea’s Q1 2022 fees exceeded the combined total of all NFT marketplaces from Q2 2022 through Q3 2024.
This shift highlights a broader trend: speculative enthusiasm for novel use cases often fades, while core financial utilities endure.
Token Transfers: ETH and Stablecoins Lead the Way
Beyond dApp interactions, a foundational use of Ethereum is token transfer—sending assets across addresses. While millions of unique tokens exist on Ethereum, two categories dominate fee generation: ETH and stablecoins.
As the native currency of the network, ETH naturally incurs significant transfer costs. But since the adoption of the ERC-20 standard in 2017, the landscape diversified rapidly. The ICO boom introduced countless new tokens, increasing both usage and fee volume.
Stablecoins emerged as a game-changer. Starting with Tether (USDT) in mid-2019 and gaining momentum with Circle’s USDC launch in late 2020, stablecoins became essential tools for trading, hedging, and cross-border payments. At times, stablecoin transfer fees have rivaled or even surpassed those of ETH.
Even today, despite the rise of Layer 2 solutions and alternative blockchains, ETH and stablecoin transfers remain central to Ethereum’s fee economy. This reinforces two key points:
- ETH maintains its role as the backbone of network activity.
- Stablecoins represent one of crypto’s most durable and practical use cases.
Infrastructure Spending: MEV, Bridges, and Layer 2
Ethereum’s operational architecture has transformed dramatically over the past five years. Changes in consensus (the Merge), fee mechanics (EIP-1559), and data availability (EIP-4844) have reshaped how value flows through the system.
Three infrastructure components now drive much of the non-application spending:
Maximal Extractable Value (MEV)
Over 50% of current infrastructure-related fees are linked to MEV. This refers to profits extracted by validators (or searchers) through strategic transaction ordering—such as arbitrage between DEX prices or front-running profitable trades.
While controversial, MEV is an inevitable byproduct of transparent, permissionless markets. It also represents real economic activity occurring on Ethereum.
Bridges
Cross-chain bridges allow assets and data to move between Ethereum and other networks. As multi-chain ecosystems grow, so does demand for secure bridging—though this comes with security trade-offs.
Layer 2 Solutions
Rollups like Arbitrum, Optimism, and Base have offloaded much of Ethereum’s transaction load. From 2022 to 2023, L2 settlement fees were a major contributor to Ethereum revenue. However, EIP-4844 (Proto-Danksharding) slashed these costs—from $41 million in February 2024 to just $1.6 million by June—effectively subsidizing L2 growth at the expense of base-layer fee income.
👉 See how next-generation blockchain upgrades are redefining scalability and user cost efficiency.
This shift creates a paradox: while L2s expand Ethereum’s capacity, they reduce direct fee pressure on Layer 1—potentially weakening the short-term economic link between usage and ETH value.
The Big Picture: Demand Is Concentrated—and Declining
Despite Ethereum’s technological advancements, total transaction spending has declined since its 2021 peak ($3.5 billion in H1 2021 vs. ~$1.5 billion in H1 2024). Moreover, usage remains highly concentrated:
- Dominated by speculative trading (DEXs)
- Reliant on volatile NFT cycles
- Increasingly outsourced to L2s
For ETH investors, this presents a challenge: value accrual depends on persistent, fee-generating demand for Ethereum’s core services. If most economic activity migrates off-chain or off-L1, what sustains long-term ETH demand?
The answer may lie in cultivating meaningful on-chain utility—use cases that can scale without fully leaving Ethereum’s settlement layer. Examples include decentralized identity, verifiable computation, institutional DeFi rails, and sovereign asset custody.
Frequently Asked Questions (FAQ)
Q: What is the main driver of ETH’s value?
A: The primary driver is demand for transaction space on the Ethereum network—specifically, how much users are willing to pay in gas fees to interact with dApps, transfer assets, or secure infrastructure services.
Q: Does staking determine ETH’s price?
A: Not directly. While staking influences supply dynamics by locking up ETH, it doesn’t generate revenue for the asset itself. Long-term value hinges more on usage-driven fee demand than yield alone.
Q: Are Layer 2 solutions good or bad for ETH?
A: They’re beneficial for scalability but pose a challenge for fee accrual. By reducing L1 congestion and costs, L2s improve user experience but may dilute direct economic benefits to ETH holders unless new value-capture mechanisms emerge.
Q: Why are DEXs so dominant in fee generation?
A: Because trading digital assets—especially volatile ones—is a high-frequency, high-value activity. Users consistently pay premiums for fast execution and access to long-tail tokens unavailable elsewhere.
Q: Can stablecoins sustain Ethereum’s economy?
A: Yes. As trusted mediums of exchange and stores of value in volatile markets, stablecoin transfers generate consistent fee flow. Their integration into DeFi further cements their importance.
Q: What could increase ETH’s long-term value?
A: Widespread adoption of non-speculative, high-value use cases on Layer 1—such as decentralized finance for institutions, verifiable AI outputs, or global payment rails—that require secure settlement on Ethereum.
Ethereum has proven its resilience and adaptability. But for ETH to realize its full potential as a valuable digital asset, the ecosystem must evolve beyond speculation toward durable, scalable utility that keeps demand anchored to the base layer.