Debate Over Ethereum Bottom Continues Amidst Challenges
**Ethereum Faces Revenue Pressure as Competition Intensifies**
As network activity and fee income continue to decline, Ethereum (ETH/USD) faces serious challenges. In April 2025, transaction fees dropped to five-year lows, largely due to reduced demand for base-layer decentralized finance (DeFi) operations. With investor sentiment weakening around the first major smart contract platform, several institutions have started trimming their ETH holdings in response to the revenue squeeze.
Meanwhile, competition is heating up. In 2024, Solana attracted more new developers than Ethereum — recruiting 7,625 compared to Ethereum’s 6,456 — signaling a shift in developer momentum. While Ethereum remains the largest developer ecosystem, this data shows its dominance is no longer uncontested.
In response to these pressures, Ethereum community members Kevin Owocki and Devansh Mehta have proposed a new application-layer fee model. Their idea introduces a square root-based pricing structure that proportionally reduces fees as project funding increases, capping costs at 1% for projects raising over $10 million. This aims to ease financial burdens on smaller app developers, encouraging ecosystem growth.
The proposal reflects growing calls to update Ethereum’s economic design to stay competitive with faster-growing networks like Solana. As one community member put it, “Ethereum needs to balance revenue generation with developer-friendly economics if it wants to maintain its leadership position.