Ethereum in the Bull Market: An Undervalued Blue-Chip or a Slowing Giant?

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As the crypto bull market shifts into the altcoin season, Ethereum (ETH) finds itself under increasing scrutiny. Since the start of the 2023–2025 bull cycle, ETH has maintained its position as a foundational asset in the ecosystem. However, recent performance suggests a growing divergence between expectations and reality. While Bitcoin (BTC) has surged over 300% and Solana (SOL) more than 1,300% since late 2023, Ethereum’s peak gain of around 170% appears modest by comparison. Stuck oscillating near the $4,000 resistance level, ETH raises a critical question: Is Ethereum being unfairly undervalued, or is it simply losing momentum in an increasingly competitive landscape?

This article dives deep into on-chain metrics, user behavior, and ecosystem dynamics to assess whether Ethereum remains a core investment or if its dominance is quietly eroding.

Stagnant On-Chain Activity: A Year Without Growth

One of the most telling signs of network health is on-chain activity. Over the past year, Ethereum’s key engagement metrics have shown little to no meaningful growth.

Daily transaction volume—a core indicator of network usage—has remained largely flat. On December 8, 2023, Ethereum processed approximately 1.18 million transactions. A year later, on December 8, 2024, that number had only risen to 1.22 million. While there was a brief spike to 1.96 million in January 2024, activity has otherwise fluctuated between 1 million and 1.3 million daily transactions—a range that hasn’t expanded significantly despite broader market enthusiasm.

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Gas fees further reflect this stagnation. In late 2023 and early 2024, average gas prices hovered above 40 Gwei, occasionally spiking near 100 Gwei during peak congestion. But as alternative Layer 1 chains like Solana gained traction with low-cost, high-speed transactions, Ethereum’s gas fees dropped sharply—falling as low as 0.3 Gwei between July and September 2024. Even with a modest rebound, fees have remained below 20 Gwei for much of late 2024.

While lower fees might seem positive, they signal reduced demand rather than improved efficiency—at least on the mainnet. The original rationale for Layer 2 (L2) scaling solutions was high gas costs on Ethereum’s base layer. Now that fees are low, one would expect user activity to return. Instead, users have stayed on L2s, suggesting a structural shift rather than a temporary migration.

Active address trends corroborate this picture. Both native Ethereum addresses and ERC-20 token interactions have seen no substantial increase, remaining at levels comparable to pre-bull market conditions.

The Great Migration: Users Move to L2s, Capital Stays on L1

Where have Ethereum’s users gone? The data reveals a clear trend: users are moving to Layer 2s, while institutional and large-cap capital remains anchored on Layer 1.

A year ago, Ethereum mainnet accounted for about 50% of total ecosystem active addresses when compared to all L2 networks combined. Today, that share has dropped to roughly 24%. Among individual chains, Ethereum was the most active in December 2023 with a 32.48% share. By December 2024, Base had taken the lead with 50%, followed by Ethereum at 19% and Arbitrum at 9.2%.

Despite this user exodus, Total Value Locked (TVL) on Ethereum mainnet tells a different story. In December 2023, Ethereum held about 95% of the ecosystem’s stablecoin-denominated TVL. Though slightly down to around 91%, it remains the dominant destination for capital preservation. More impressively, Ethereum’s TVL surged from $28.8 billion to $77.5 billion over the past year—an increase of nearly 169%, outpacing ETH’s own price appreciation.

Arbitrum and Base rank second and third in L2 TVL, but neither comes close to Ethereum’s scale. Revenue distribution echoes this trend: Ethereum mainnet captures over 90% of protocol income within the ecosystem as of December 8, 2024, up from already dominant levels.

Even as its market share across the broader crypto ecosystem has declined—from over 18% to approximately 13.4%—Ethereum maintains unmatched capital density. When measuring TVL per active user, Ethereum leads with $178,700 per user**, far surpassing Base (~$3,315) and Solana (~$1,972). This indicates that while retail activity may have shifted elsewhere, large investors still view Ethereum mainnet as the most secure and trusted layer for asset storage**.

Uniswap’s Potential Exodus: A Threat to Ethereum’s Core Narrative

Uniswap remains the undisputed king of decentralized exchanges (DEXs) on Ethereum. Combined volumes from Uniswap V2 and V3 account for over 97% of DEX activity on mainnet. It also tops the gas consumption charts—burning 6,372 ETH in the past 30 days alone, compared to just 4,594 ETH burned by simple transfers.

However, Uniswap’s plans to launch its own L2 chain—Unichain—pose a significant risk to Ethereum’s long-term value proposition. If Uniswap migrates most of its trading volume off mainnet, Ethereum could see a dramatic drop in transaction activity and fee burn.

According to reports, this transition could cost Ethereum validators $400–500 million annually in lost revenue. More critically, it undermines Ethereum’s deflationary narrative—the idea that network usage burns ETH supply through EIP-1559, creating scarcity.

Uniswap’s router alone consumes 14.5% of all Ethereum gas, equivalent to $1.6 billion worth of ETH burned since the mechanism’s inception. Losing this engine of deflation would weaken one of Ethereum’s most compelling monetary stories.

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Shifting Role: From Mass Adoption Platform to Institutional Vault

The evidence points to a fundamental transformation in Ethereum’s role within the crypto ecosystem:

In essence, Ethereum is evolving from a general-purpose blockchain into a high-security settlement layer—a digital vault for large holders and institutions prioritizing safety over speed or low fees.

This shift doesn’t mean Ethereum is failing. Rather, it reflects a maturing ecosystem where roles are becoming specialized:

For meme coins and high-frequency trading apps chasing viral growth, Ethereum mainnet is no longer the go-to platform. But for protocols requiring rock-solid security and deep liquidity, it remains unmatched.

Frequently Asked Questions (FAQ)

Q: Is Ethereum still a good investment in 2025?
A: Yes—for long-term holders seeking security and ecosystem stability. While its price growth may lag behind high-beta altcoins during rallies, Ethereum remains foundational to DeFi, NFTs, and institutional adoption.

Q: Why isn’t Ethereum growing in users despite lower gas fees?
A: Lower fees reflect reduced demand, not improved usability. Most new users now prefer faster, cheaper L2s like Base or zkSync, or alternative L1s like Solana.

Q: Could Layer 2 dominance weaken Ethereum’s value?
A: Only if L2s become fully independent. Currently, most rely on Ethereum for data availability and security—meaning mainnet still captures value through settlement and staking.

Q: What happens if Uniswap moves most activity off-chain?
A: Short-term drops in gas fees and ETH burn are likely. However, if Unichain remains an Ethereum-aligned rollup, the impact may be more symbolic than structural.

Q: Is Ethereum becoming obsolete?
A: No—but its role is changing. It's transitioning from a “do-everything” chain to a secure base layer for the broader crypto economy.

Final Thoughts: The Enduring Strength of a Maturing Giant

Ethereum may no longer be the fastest or most active blockchain—but it doesn’t need to be. As the market evolves, so does its leadership model.

Rather than viewing stagnant on-chain metrics as weakness, they should be interpreted as signs of strategic consolidation. Ethereum is no longer competing on speed or cost; it’s winning on trust.

With strong TVL growth, continued dominance in protocol revenue, and unmatched capital density, Ethereum remains a cornerstone of the digital asset landscape—even if its glory days of explosive user growth are behind it.

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