Ethereum is on track for a $1B annual profit as DeFi drives Q1 revenue.
Blockchain network Ethereum is on track to reach $1 billion in annual profit after posting $365 million in net income in Q1, representing a 155% year-over-year quarterly revenue growth.
The network's revenue for the first quarter of 2024 is a nearly 200% increase from a profit of $123 million in Q4 2023, according to Diffie Report analyst Michael Nadeau in an April 17 report.
Ethereum's payment revenue – generated by users paying for transactions – reached $1.17 billion, an increase of 155% from Q1 2023 and 80% from the previous quarter.
An increase in network activity “primarily driven by increased DeFi activity in the quarter” was responsible for the decline in revenue, Nadeau said.
The surge in activity is seen in 2024 with average daily transactions on the blockchain surpassing last year's figure and closing in on Ethereum's peak in 2021.
In the year By 2024, more than 1.15 million average daily transactions were conducted.
Ethereum launched in 2015, but only had its first profitable year in 2023—earning $623 million—even though that year's revenue was 75% lower than its 2021 peak of $9.9 billion.
“This is largely based on the mutual agreement that was signed on September 22 – which reduced the incentives for miners (now verifiers) by 80 percent,” Nadeau explained.
Ethereum payments have grown by 58% since 2017, he said.
“Crypto will surpass everything” in the coming years.
Nadeau gave his market forecast for the coming years and concluded that “crypto will surpass everything else”.
He also expected increased liquidity conditions for the “next few years” as the United States needs a large amount of debt restructuring this year and the market has been eyeing three rate cuts from the Federal Reserve this year.
“This should provide a tailwind for risky assets like tech stocks and quality crypto.”
The U.S. spot bitcoin (BTC) exchange, the bitcoin halving, and what Nadow calls an “innovation cycle” are three additional catalysts that “point to a bright future for the next few years.”
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Bitcoin ETFs serve as an “entrance drug” to increased demand for cryptocurrencies, as they allow for wider access and the halving — scheduled for April 20 — “has historically led to a bull run in a year.”
The “innovation cycle” will attract new venture funding and renew retail interest in crypto as it matures, Nadeau believes.
He says that Bitcoin and Ether (ETH) are “highly correlated” – Bitcoin outperforms early in the bull market because it is the most popular cryptocurrency, while ETH and altcoins outperform in the later stages of the cycle.
“Altcoins have rallied so much in the last two cycles that it is interesting to note that they have outperformed Bitcoin for the entire length of both cycles,” Nadeau added.
He believed this would continue, but only with altcoins that have a “clear product market fit.”
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