Blockchain network Ethereum is on the path to $1 billion in annualized profits after it netted income of $365 million in Q1, coming alongside a year-on-year quarterly revenue growth of 155%.

The networks 2024 first-quarter income is a nearly 200% bump from the $123 million profit in Q4 2023, according to an April 17 report from The DeFi Report analyst Michael Nadeau.

Ethereums fee revenue earned through users paying for transactions hit $1.17 billion, up 155% from Q1 2023 and an 80% increase from the prior quarter.

Increased network activity primarily driven by a surge in DeFi activity during the quarter was the cause of the revenue bump, Nadeau said.

The activity surge has seen average daily transactions on the blockchain in 2024 already surpass last years figures and are closing in on the results from Ethereums peak in 2021.

Over 1.15 million average daily transactions have taken place in 2024, slightly up from the 1.05 million last year and just shy of the 1.25 million recorded in 2021.

Ethereum was launched in 2015 but only had its first profitable year in 2023 earning $623 million despite its revenues that year being 75% lower than its peak $9.9 billion 2021 revenues.

This is largely due to the move to proof-of-stake consensus in September of 22 in which token incentives paid to miners (now validators) dropped roughly 80%, Nadeau explained.

He added Ethereums fees have grown at a rate of 58% since 2017.

Nadeau gave his market predictions for the coming years and concluded that crypto will outperform everything else.

He expected rising liquidity conditions for the next few years as the United States has a large amount of debt needing refinancing this year and the market had priced in three rate cuts this year from the Federal Reserve.

The U.S. spot Bitcoin (BTC) exchange-traded funds, the Bitcoin halving and what Nadeau called the innovation cycle were three additional catalysts pointing to a bullish setup for the next few years.

Related: Bitcoin fees top Ethereum for 3 days in a row as halving approaches

The Bitcoin ETFs will serve as a gateway drug for increased interest in cryptocurrencies as they enable broad access and the halving slated for April 20 has historically led to a bull run in the year after.

The innovation cycle will also draw in new venture funding and renew retail interest in crypto as it matures, Nadeau believed.

He claimed Bitcoin and Ether (ETH) are quite correlated Bitcoin outperforms early in the bull market as it is the most recognizable cryptocurrency while ETH and altcoins tend to outperform it in the later stages of the cycle.

Its noteworthy that altcoins actually rallied so much in the last two cycles that they outperformed Bitcoin across the full length of both cycles, Nadeau added.

He believed this would continue but only with altcoins that have clear product market fit.

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Ethereum on track for $1B annual profit as DeFi drives Q1 revenue - Cointelegraph

When compared to the previous quarter, the total value locked (TVL) in decentralised finance (DeFi) approximately doubled during the first quarter of 2024, indicating that DeFi has witnessed tremendous growth from the previous quarter. It is possible to ascribe, at least in part, this spike to Ethereum's liquid restaking activities, which have been the driving force behind the expansion of DeFi TVL prices. Protocols such as Lido and EigenLayer have been essential in this growth, since they have contributed to the widespread adoption of liquid staking and restaking.

Recent study indicates that DeFi TVL experienced a significant increase from a low of $36 billion in the fourth quarter of 2023 to a high of approximately $97 billion in the first quarter of 2024. This is an increase of 81% and marks a high point for DeFi TVL that has been reached in the last two years. There was a modest rise in the TVL data that Messari gave, and he said that the amount of DeFi collateral climbed by 65.6% from the previous quarter to reach $101 billion. A number of factors, including the rise in the values of underlying assets and the implementation of liquid restaking, have contributed to the expansion of TVL.

Both asset price appreciation and liquid restaking were the primary factors that contributed to the increase of Ethereum's total value of assets (TVL), which was roughly 71% higher than before. Lido and EigenLayer are two examples of protocols that have played a significant role in the revival of DeFi TVL since its inception. On March 13, liquid staking TVL achieved an all-time high of $63 billion. This result was mostly driven by the Ethereum liquid staking protocol Lido, which now controls a market share of 62% of the liquid staking ecosystem. In addition, during the first three months of 2024, the liquidity restaking protocol known as EigenLayer seen a significant increase in both its popularity and its utilisation. The total value of EigenLayer's TVL reached $12 billion at the conclusion of the quarter, representing a stunning 990% rise. EigenLayer makes it possible to stake Ethereum several times, which results in increased returns.

In addition to liquid restaking activities, user activity also played a big influence in the expansion of DeFi TVL. This growth was not just contributed by liquid restaking initiatives. In the most recent quarter, QuickNode recorded a significant increase in user activity of 29.1% compared to the previous quarter, which has spurred expectations of a second "DeFi Summer". Despite the attempts of the SEC to regulate the decentralised finance area, there are indications that expansion and a paradigm change are on the horizon.

However, the current retreat in the cryptocurrency market has resulted in a decrease in the value of DeFi TVL that has been seen. As this article is being written, the value of DeFi TVL has dropped by 11%, reaching $86.6 billion. The entire value of assets that are locked in DeFi protocols has been negatively impacted as a consequence of the larger market slump, which has cause this reduction.

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Ethereum Liquid Restaking Drives DeFi TVL to $100B in Q1 2024 - Blockchain.News

EigenLayer, explained

EigenLayer aims to eliminate a critical barrier many new DApps face by providing developers with an established security framework.

Ethereum has come a long way since its launch in 2015. It has held its position as the most influential blockchain, successfully transitioned from proof-of-work (PoW) to proof-of-stake (PoS), and is the foundation for many innovative crypto projects.

One such project is EigenLayer, a decentralized Ethereum staking protocol that provides developers with an established security pool. This EigenLayer explanation details staking and other vital parts of the Ethereum staking protocol.

The EigenLayer protocol is an Ethereum-based project aiming to improve the networks PoS consensus through a process called Ethereum restaking. The EigenLayer team claims to solve many existing Ethereum security inefficiencies, such as requiring every protocol to manage its own security and scalability processes.

However, before discussing the EigenLayer restaking process, defining the traditional Ethereum staking process is essential.

Staking is one of cryptos most popular features, providing traders with a reliable passive income stream.

Staking involves locking ones cryptocurrency in a staking pool, exchange or smart contract. A user earns interest on their staked assets, and in turn, the network utilizes these assets to cultivate network security. The more funds a user stakes, the more passive income they make.

High-value stakeholders often become validators who participate in transaction validation and vote on upcoming or existing proposals to improve the network. The idea is that stakers are more invested in protecting the blockchain network and less likely to become bad actors. Staking incentivizes good behavior as well. Validator rewards on Ethereum are slashed if a validator fails to participate in the networks best interest.

Decentralized staking is seen as the more accessible form of transaction validation when compared to PoW. PoW has miners racing to be the first block validator to earn a reward. This process has miners spending thousands on computer equipment to increase their hash rates, meaning those who spend the most earn the most. As these users continue to amass tokens, it becomes even more difficult for new miners to get involved.

Staking on Ethereum is similar to holding a savings account in a traditional bank and requires much less effort from the user. Thanks to the advent of staking pools, even users without much money to spare can begin their staking journey.

Restaking is EigenLayers take on traditional staking. It provides new ways for users to generate passive income while increasing network security.

Restaking, in the case of EigenLayer, is the act of taking staked Ethereum and repurposing it to increase security on other protocols essentially creating a pool of restaked assets from which other decentralized applications (DApps) can pull. Users can opt-in to EigenLayers restaking smart contract through their already staked Ether (ETH) or through a liquid staking token (LST).

When a user stakes funds on an Ethereum protocol, most projects offer liquid staking tokens to represent those staked assets a sort of receipt. These tokens allow one to keep using their funds in other ways, such as restaking them through EigenLayer via a process called LST restaking without unstaking their original assets.

Alternatively, users can allow EigenLayers smart contracts to work with their already-staked ETH. Restaking with already-staked ETH is called native restaking. If a user participates in native restaking, the network will add those assets to the protocols security pool. How safe is EigenLayer? Its about as secure as the size of its security pool.

Applications built on EigenLayer are called actively validated services (AVSs) and can be anything from a bridge to a DApp to an oracle. Developing on EigenLayer is cheaper and more efficient than developing on a separate protocol, as EigenLayer has an established trust network in place through restakers. Developing elsewhere requires building a trust network from scratch.

That said, AVSs arent randomly harnessing services from EigenLayer. Instead, theres an intermediary called a node operator, a volunteer opting to help manage the network. Much like an Ethereum validator, an operator can be a single user or an organization.

Operators can build their own AVSs or provide services to other existing AVSs while receiving rewards in return. However, operators are also subject to an AVSs slashing requirements should they fail to perform their duties.

Moreover, operators can be restakers, or restakers can choose to delegate their restaked assets to an operator. Either way, restakers have complete control over which services their assets go toward. As a result, EigenLayer creates a sort of free-market governance system. Developers build on EigenLayer to harness its established security, while operators and restakers earn rewards for managing and providing said security.

EigenLayer streamlines asset management through its EigenPod solution.

Users must connect their wallet to the EigenLayer application and select the token they want to restake. First-time restakers must approve the process before depositing funds into EigenLayers restaking contract.

A restaker manages their restaked assets through an EigenPod, a smart contract created during the restakers initial restaking process. An EigenPod is essentially a hub for the restaker to manage restaking processes, withdrawals and more. There can only be one EigenPod per Ethereum wallet address.

Restakers can visualize their network contributions through EigenLayers restaked points. Users earn restaked points every time a block is validated from their restaking date onward. EigenLayer calculates a users restaked points through a proprietary formula that factors the amount of restaked assets and the time theyve been locked in. The formula views native restaked ETH and restaked LST equally.

Users can withdraw their staking rewards on EigenLayer through a partial or full withdrawal process. Restakers who want to withdraw their earned rewards but continue providing services go through a partial withdrawal process. Partial withdrawals require on-chain proofs, and their gas fees can be expensive. Restakers can request one partial withdrawal every four to five days, and withdrawn funds must go through an additional escrow period before appearing in the restakers wallet.

Full withdrawals are for restakers who no longer want to provide their services. Otherwise, the process is similar to a partial withdrawal, requiring on-chain proofs and an escrow period for withdrawn funds. If a restaker accidentally initiates a full withdrawal, they can redelegate their assets via EigenPods redeposit button. Restakers can initiate either withdrawal process through their EigenPods Unstake section.

EigenLayer features innovative solutions, though this Ethereum network upgrade also introduces its own problems.

EigenLayer hopes to innovate on Ethereums tried-and-true proof-of-stake feature. In some ways, it is doing just that. However, its innovations arent perfect and can lead to new problems.

Since restakers can use their staked assets in additional ways, they have the potential to earn higher rewards than traditional staking methods.

EigenLayers security pool eliminates a key barrier many new projects struggle to overcome. Now, developers can focus on providing valuable services without worrying about establishing trust.

By removing one of the most significant barriers that newer projects face, EigenLayer could lead to genuinely innovative layer-2 projects.

While EigenLayer benefits new DApps by providing them with established security, restaking to participate in the network may overwhelm some users. Many crypto exchanges offer staking as a built-in service, simplifying node setup and maintenance for users on the network. That accessibility comes at the cost of technical know-how. If less technical users are already comfortable with the staking process, they will unlikely be interested in restaking.

EigenLayer AVSs have slashing rules that are different from traditional staking. Since restakers hold assets in traditional staking and restaking avenues, theyre doubling their slashing risk should they fail to uphold their duties.

Not only this, but restakers are doubling their exposure to security risks. Stakers already trust Ethereums smart contract code when they stake assets, and restaking requires trust in EigenLayers development prowess. This isnt to mention the quality of EigenLayer AVSs.

Fortunately, both Ethereum and EigenLayers code is entirely open-source. Knowledgeable developers can assess this code before risking their assets.

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What is EigenLayer? Ethereum's restaking protocol, explained - Cointelegraph

Degen Chain, a new Ethereum layer-3 network, has recorded the highest transaction per second (TPS) count in the Ethereum ecosystem over the last 24 hours.

Degens TPS count increased 62% over the last day to notch 35.7 TPS beating out the blockchain it was built on, Base, at 29.7 TPS, according to L2BEAT.

Arbitrum One, Ethereum and zkSync Era rounded out the top five.

Multiplying Degens 35.7 TPS by 86,400 seconds in a day means the memecoin chain processed 3.08 million transactions over that timeframe.

But Degen Chain has only notched $819,600 in trading volume over the last day, placing it 35th out of 44 blockchains tracked by CoinGecko.

This means the average value per transaction was a mere $0.27 which is much lower compared to Ethereum and Base at $1,867 and $170 respectively.

While TPS is widely used to measure a blockchains scalability limits, several industry leaders say it is a flawed metric as it fails to consider the computational size of each transaction.

[It] is a bit like counting the number of bills in your wallet but ignoring that some are singles, some are twenties, and some are hundreds, explained Steven Goldfeder, a founder at Offchain Labs who recently spoke with Cointelegraph Magazine.

Related: Memecoin sectors continued growth hinges on long-term utility

The memecoin turned chain is powered by the Degen (DEGEN) token, which initially started out as a tipping token for users interacting with Degens channel on Farcaster a decentralized social media platform.

This is a textbook example of how a memecoin can actually accrue social value, according to Thomas Tang, a vice president of investments at cryptocurrency venture capital firm Ryze Labs.

Its gained massive mass popularity because everyones tipping each other, and everyone holds it, Tang told Cointelegraph.

So they built a layer 3, based on that.

There is currently $4.1 million in total value locked on Degen Chain, while the three-month-old DEGEN token boasts a market capitalization of $326 million, according to CoinGecko.

Degen Chain is considered an ultra-low-cost, application-specific layer 3 blockchain which was built with Arbitrum Orbit and leverages the settlement layer of Base, an Ethereum layer-2 scaling solution.

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Degen Chain L3 now tops the TPS charts within the Ethereum ecosystem - Cointelegraph

Fees on Bitcoin have surpassed Ethereum for three consecutive days as miners and traders prepare for the upcoming Bitcoin halving and, to a lesser extent, the introduction of Runes on Bitcoin.

Bitcoin(BTC)miners cashed in $7.47 million in fees on April 17 about $160,000 more than the $7.31 million paid to Ethereum stakers, according to Crypto Fees.

Bitcoin miners also raked in $9.98 million and $5.91 million across April 15 and 16 beating out Ethereum stakers by $3.5 million and 1.1 million on those respective days.

Ethereum, however, maintains a narrow lead on a seven-day average fee basis at $8.55 million compared with Bitcoins $7.57 million.

Bitcoin transaction fees are determined by the size or data volume of the transaction and blockspace demand at the time of the transaction request.

The uptick in Bitcoin fees comes at a crucial time for Bitcoin miners, as April 20s Bitcoin halving event will result in the mining subsidy being sliced from 6.25 BTC ($398,000) to 3.125 BTC ($199,000).

Currently, about 900 BTC is mined per day, which equates to about $57.2 million at current prices.

Using April 17s $7.47 million fee count, this means transaction fees accounted for 11.5% of the Bitcoin mining industrys total block rewards.

However, the share of block rewards from transaction fees will increase considerably after the halving event, as approximately 450 BTC will be mined then.

Miners will, therefore, rely more on higher fees and a continued increase in Bitcoins price to make up for the revenue fall that it will experience at least in the short term from the halving.

Meanwhile, the introduction of NFT-like Ordinals inscriptions in January 2023 has helped Bitcoin miners chalk up more revenue from transaction fees and a new revenue stream will become available when Runes, a new Bitcoin token standard, is released when the halving occurs at block 840,000.

Related: China has a Trojan Horse in US Bitcoin mining infrastructure

Runes will compete with Ordinals by aiming to make it easier to create fungible tokens on Bitcoin for memecoin enthusiasts and other community-driven audiences.

Its creator, Casey Rodarmor who also invented Ordinals said Runes are fully UTXO-based and, therefore, should not spam Bitcoin to the same extent that Ordinals has.

The recent uptick in Bitcoin fees may have been partially driven by a decline in BRC-20 token prices in recent days as some trader attention shifts to Runes.

Ordinals (ORDI) and Sats (SATS), the two largest BRC-20s by market capitalization, have seen falls of 38% and 43%, respectively, over the last week, according to CoinMarketCap.

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Bitcoin fees top Ethereum for 3 days in a row as halving approaches - Cointelegraph