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Ethereum upgrade affects short-term income, but long-term development is still optimistic.
Ethereum faces multiple challenges, but the long-term outlook remains positive
The upcoming Cancun/Deneb upgrade of Ethereum is expected to significantly reduce the cost expenditures for Rollup operators, which could adversely affect Ethereum's short-term revenue. As the interoperability of Rollup projects with other high-performance, low-cost settlement and data availability chains increases, the performance of ETH may be impacted.
In the long run, if the modularization theory of blockchain is validated, the main source of revenue for layer one public chains like Ethereum and Celestia will be layer two Rollup service providers, rather than end users. Furthermore, as more layer two public chains increasingly adopt account abstraction, the primary group holding Ether to pay for block space in the future is likely to be Rollup operators, rather than end users.
Since 2023, transaction activity on Ethereum's Layer 2 networks has more than doubled. Among the Layer 2 networks, Base and zkSyncEra have seen the most significant growth in locked value. Currently, the sequencers of Optimism, Base, and Arbitrum have generated $140 million in revenue from user fees.
The main change in the Cancun/Deneb upgrade is EIP 4844, which will create dedicated block space for Rollup transactions. This could reduce the block space fees paid by Rollup to Ethereum by more than 10 times, thereby affecting Ethereum's revenue in the short term.
In the long term, with the widespread adoption of blockchain applications, Ethereum's revenue may increase, and the usage rate of Rollups will rise significantly. Lower layer two network fees can bring new blockchain application scenarios to multiple industries.
Despite the challenges, Ethereum's advantages as the most decentralized and secure general-purpose public blockchain may continue to attract users. Core developers are working to enhance Ethereum's data availability features through upgrades. The maturation of new technologies such as account abstraction and re-staking will also bring new opportunities to Ethereum.
Overall, although Ethereum may face challenges such as declining revenue in the short term, in the long run, with the development of the ecosystem and technological advancements, Ethereum still has a good development prospect.