The Ethereum network’s primary revenue stream from layer-2 (L2) scaling solutions — known as blob fees — has dipped to its lowest weekly level of 2025, signaling ongoing challenges in monetizing its expanded data capacity post-upgrade.
According to data from Etherscan, Ethereum earned just 3.18 Ether (ETH) — roughly $6,000 at current market rates — in blob fees during the week ending March 30. This represents a dramatic 73% decrease from the previous week and a staggering over 95% drop compared to the week ending March 16, when blob fee income exceeded 84 ETH.
This sharp decline highlights the volatility and uncertainty surrounding Ethereum’s evolving economic model following the Dencun upgrade in March 2024, which introduced proto-danksharding and shifted L2 transaction data off the main chain into temporary storage units called blobs.
The Dencun Upgrade and Its Economic Impact
The Dencun upgrade was designed to drastically reduce transaction costs for users on layer-2 networks by moving large volumes of transaction data off Ethereum’s mainnet and into blobs — short for binary large objects. These blobs store data temporarily, reducing congestion and gas fees on the base layer.
While this shift has successfully lowered user costs, it has also significantly reduced Ethereum’s fee income. In the immediate aftermath of Dencun, overall transaction fee revenue fell by as much as 95%, according to analysis by asset manager VanEck.
“ETH Fees Were Weak Due to Lack of Blob Revenues as L2s Have Not Filled Available Capacity,” said Matthew Sigel, VanEck’s head of digital asset research, in a November 2024 post on X.
Despite the potential long-term benefits of scalable, low-cost transactions, Ethereum is still struggling to generate consistent income from blob space utilization. Weekly blob fee revenue peaked at nearly $1 million in November 2024 but has since entered a steep decline, reflecting underutilization of available data capacity.
Why Blob Fees Matter for Ethereum’s Future
Blob fees are more than just a revenue line item — they represent a fundamental shift in Ethereum’s role within the broader blockchain ecosystem. With most transaction processing now handled by L2s, Ethereum is increasingly becoming a data availability layer, ensuring security and verifiability for off-chain computations.
As arndxt, author of the Threading on the Edge newsletter, noted in a March 31 post:
“Ethereum’s future will revolve around how effectively it serves as a data availability engine for L2s.”
This transformation raises critical questions about sustainability. If L2s continue to underuse blob space, Ethereum may face prolonged periods of low fee income — a concern for validators and long-term network health.
Michael Nadeau, founder of The DeFi Report, emphasized the scale of the challenge:
“L2 transaction volumes would need to increase more than 22,000-fold for blob fees to fully offset Ethereum’s peak transaction fee revenues.”
Such exponential growth is not impossible in a bull market, but it underscores the network’s current reliance on speculation and future potential rather than present-day utility.
Scaling Without Immediate Monetization
Ethereum developers have acknowledged the trade-off between scalability and short-term revenue. The priority remains expanding capacity and capturing market share across decentralized applications, DeFi, and emerging use cases like AI and identity systems.
Sassal, founder of The Daily Gwei, captured this sentiment clearly:
“The plan is simple: scale Ethereum as much as possible to capture as much marketshare as we can – worry about fee revenue later.”
This long-term strategy hinges on the assumption that increased adoption will eventually fill available blob space and drive fee income upward. However, until that happens, Ethereum must navigate a period of economic uncertainty.
An upcoming upgrade — the Pectra Upgrade, expected in 2025 — aims to refine how blob space is allocated and used. Proposed changes include increasing the number of blobs per block and improving wallet integration for staking and account abstraction. These enhancements could incentivize greater L2 activity and boost fee generation.
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FAQ: Understanding Ethereum’s Blob Fee Dynamics
What are blob fees on Ethereum?
Blob fees are charges paid by layer-2 networks to post transaction data on Ethereum’s main chain. This data is stored in temporary "blobs" introduced in the Dencun upgrade to reduce congestion and lower user costs.
Why have blob fees dropped so sharply?
Blob fees have declined because L2 networks are not fully utilizing the available blob space. Despite lower costs encouraging more activity, actual demand has not kept pace with supply, leading to underutilization and falling revenues.
Can Ethereum sustain low blob fee income?
In the short term, yes — Ethereum’s security is funded primarily through issuance, not fees. However, long-term sustainability depends on achieving higher L2 adoption and consistent data demand to support validator incentives without excessive inflation.
How do blob fees affect ETH price?
While not a direct driver, persistently low blob fees may signal weak network activity or underused infrastructure, potentially affecting investor sentiment. Conversely, a rebound could indicate growing L2 adoption and renewed confidence in Ethereum’s scalability.
What is the Pectra Upgrade’s role in fixing this?
The Pectra Upgrade is expected to improve blob efficiency by increasing per-block capacity and enhancing account abstraction features. These changes aim to make blob usage more attractive and cost-effective for developers and L2 operators.
Could AI or new dApps boost blob demand?
Yes. Emerging use cases like AI-driven agents, decentralized social networks, and high-frequency DeFi protocols could generate massive data needs. If these applications build on Ethereum-based L2s, they could drive significant increases in blob usage and associated fees.
The Road Ahead: Balancing Growth and Revenue
Ethereum stands at a pivotal moment in its evolution. The success of its scaling roadmap depends not only on technical execution but also on economic viability. While reducing user costs was a necessary step, the network must now focus on driving demand for its newly expanded capacity.
Developers, validators, and investors alike are watching closely to see whether L2 adoption accelerates in 2025. A surge in DeFi activity, NFT innovation, or enterprise blockchain integrations could reignite blob fee growth.
Until then, Ethereum continues to operate under a “build it and they will come” philosophy — investing in infrastructure today for returns tomorrow.
Final Thoughts
Ethereum’s recent plunge in weekly blob fees reflects both the success and growing pains of its ambitious scaling vision. By enabling cheaper, faster transactions through L2s, Ethereum has strengthened its position as the leading smart contract platform. Yet, monetizing that success remains an open challenge.
As the ecosystem evolves, key indicators to watch include blob utilization rates, L2 transaction volume trends, and progress toward the Pectra Upgrade. Together, these factors will determine whether Ethereum can transition from a scaling pioneer to a sustainably profitable network.
For users, developers, and investors, understanding this shift is crucial — not just for assessing network health, but for identifying early signals of the next wave of blockchain innovation.
Core Keywords: Ethereum, blob fees, layer-2 scaling, Dencun upgrade, L2 transaction volume, data availability, Pectra Upgrade, Ethereum economics