Ethereum (ETH) On-Chain Activity Has Reported a Significant Dip, Daily Burn Rate Reaches an All-Time Low

Ethereum's on-chain Layer 1 activity has reported a significant dip, according to analytics, with the daily ETH burn rate reaching an all-time low

Ethereum’s on-chain Layer 1 activity has reported a significant dip, according to analytics, with the daily ETH burn rate reaching an all-time low of just around 50 ETH yesterday. This amount, priced at about $106,000, showcases a stark decline in demand for the Ethereum blockchain. The trend has raised severe concerns for investors and institutions.

The Ethereum Improvement Proposal (EIP-1559), which was introduced in August 2021, was designed to counter inflation by burning a small portion of the transaction fees on every transaction. But as of now, the system appears to be struggling against the decline in network activity.

This reduction in the daily ETH burn rate comes along with the overall decline in Ethereum’s usage stats. Active addresses using Ethereum have sunk to an unprecedented low since late 2024. Following suit, the transaction counts and new address creations have also plummeted. These stats indicate that fewer users have engaged with the Ethereum network in the past few months.

Remarkable Low Reached, Industry Lowers ETH Expectations

In stark contrast to this low, Ethereum has witnessed much higher daily ETH burn rates in the past. For instance, in September 2024, as market activity was at its height, daily burns reached up to 6,098 ETH in a day. Considering these fluctuations and upcoming challenges for the L1 Ethereum blockchain network, Standard Chartered also sliced their price forecast for ETH by 60%, from an optimistic $10,000 to only $4,000 for 2025. This correction highlights the growing competition for the Ethereum network from Layer 2 solutions that are increasingly extracting value from the Ethereum blockchain.

Geoffrey Kendrick of Standard Chartered also mentioned that the Layer 2 platforms on the Ethereum blockchain are deriving “super profits”, hindering ETH’s efforts to mitigate the situation. As the token navigates this turbulent landscape, its future highly depends on whether Ethereum blockchain network activity can rebound and sustain proper levels. However, whether this slowdown is a temporary setback or a signal of a bigger shift remains to be seen.