Ether (ETH) has struggled to break above $2,450 for over two weeks, and the recent 17% drop in decentralized application (DApp) activity on Ethereum has raised concerns, especially as it impacts the Layer-2 ecosystem. Traders are now questioning whether the current $2,250 support will hold for much longer.
On the positive side, Ethereum remains the dominant platform in terms of both activity and development, although competitors are increasingly dominating the market.
Top blockchains ranked by 7-day DApps volume, USD. Source: DappRadar
Rising Ethereum Transaction Fees Are Negatively Impacting Ether Price
Low volume could reduce demand for Ether, possibly due to reduced fees collected or a signal that users may be moving to other networks.
Ethereum ’s current challenge is its relatively high transaction costs, which currently Medium $1.70. While scaling solutions have helped to address this to some extent, they also introduce additional complexity for users and raise questions about the long-term sustainability of the network’s security.
From an investment perspective, Staking Ether is not very attractive, as the 3.3% yield is lower than the 4.6% offered by a 6-month US Treasury note. Notably, only 28.5% of ETH in circulation is currently Staking, compared to 65.8% for Solana ( SOL ), 56.9% for Avalanche (AVAX), and 62.7% for Cardano (ADA). As a result, Ethereum Staking is no longer the main driver of inflows, providing little incentive to participate in the validating process.
Staking rates and rewards for top blockchains. Source: StakingRewards
While Staking plays a significant Vai in Ethereum’s Total Value Locked , other applications such as lending, trading, and synthetic assets also require ETH deposits. Therefore, a smaller proportion of Token participating in Staking is not necessarily a negative indicator for Ether price. Ethereum still leads in TVL, with $44.15 billion locked, nearly ten times more than BNB Chain (BNB) or Solana.
While Ethereum’s 19% weekly decline in DApp volume may seem alarming, it is important to compare it to competing blockchains to assess its overall impact on transaction fees and active addresses. For example, during the same period, Solana ’s DApp volume increased by 24%, while BNB Chain saw a 23% increase. This suggests that the decline in Ethereum’s DApp activity may not reflect a broader slowdown in the cryptocurrency market.
Not All Ethereum Network Metrics Point to Lower Activity
Among the notable negative developments on the Ethereum network is the performance of leading decentralized exchanges (DEXs). Uniswap recorded an 18% drop in volume over the past seven days, CoW Swap dropped 29%, and 1INCH also recorded an 18% drop. In contrast, BNB Chain’s Venus Protocol saw a staggering 236% increase in volume over the same period, while TON network’s Bemo Staking DApp reported a 54% increase.
Ethereum’s top Second-Layer Solutions also saw a drop in activity between September 10 and September 17. According to L2Beat, transactions per second dropped from 119 to 94 during this period. Layer-2 platforms including Arbitrum One, Linea, Mantle, Immutable X, and Scroll were all notable negatives. However, despite the drop in transaction speeds, Ethereum’s Layer-2 Total Value Locked remained stable at 14.6 million ETH.
Other network metrics also remained stable. Ethereum’s overall TVL remained steady at 18.9 million ETH between September 10 and September 17. Similarly, the number of active addresses for Ethereum DApps remained near 425,000, suggesting that despite the drop in volume, there are no clear signs of investors abandoning the network.
However, a worrying trend is the increase in the number of Ether on exchanges, which increased from 12.02 million ETH to 12.24 million ETH as of September 17, according to data from Glassnode. Higher coin volumes on exchanges typically signal a higher likelihood of short-term selling pressure, which can negatively impact price trends.
While a 17% drop in Ethereum's weekly DApp volume may be cause for concern, this alone is unlikely to push Ether below the $2,250 support level, especially given the stability in active users and TVL. Investors should continue to monitor network activity closely, but for now, there appears to be no immediate risk from this decline.
