Ethereum Blockspace Hits Negative Profitability for the First Time

Ethereum blockspace hits negative profitability for the first time

Ethereum's blockspace is encountering its first significant downturn since adopting the proof-of-stake protocol in September 2022, according to recent data from Blockworks Analytics.

Historically, Ethereum's blockspace has been profitable, deriving its profitability metric by calculating the difference between total transaction fees and the sum of protocol fees paid to validators and ETH reward issuance. However, a shift is occurring, with September on course to record considerable losses for the first time since the introduction of the new protocol, currently tallying up to $15.9 million in losses.

This downturn coincides with an increase in ETH's circulating supply, having grown by about 8,900 ETH this month based on data from ultrasound.money. Moreover, the reduction in profitability is largely due to decreased user activity and a slump in trading volumes across various on-chain sectors, including a notable drop in popular stablecoins and NFT trades since March 2023.

Despite this, it is noteworthy that Ethereum layer-2 networks like Arbitrum and Optimism are sustaining healthy activity levels, even amidst a backdrop of dwindling base layer operations.

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Nomura Bank launches Bitcoin Fund

Laser Digital Asset Management, a subsidiary of Japan’s largest investment bank, Nomura, has announced the launch of its Bitcoin Adoption Fund. This fund aims to provide institutional investors with a convenient and secure way to enter the digital assets market. By offering a streamlined gateway, Laser Digital Asset Management positions itself as a cost-effective and reliable investment avenue. This is just the beginning, as the company plans to introduce a wider range of digital adoption investment tools in the near future.

The Bitcoin Adoption Fund is part of Laser Digital Funds SPC, a registered mutual fund operating under a Segregated Portfolio Company structure. To ensure the highest level of security for the fund's assets, Laser has partnered with Komainu.

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Optimism issued its third community airdrop

Optimism, a Layer 2 blockchain, has recently conducted its third community airdrop. Users were granted 19,411,313 OP tokens, valued at $27 million. The airdrop was distributed to over 31,000 unique addresses. To be eligible for the airdrop, users needed to delegate their OP holdings to participate in governance votes. 

For future airdrops, 570 million OP tokens have been allocated. Since its launch in 2021, Optimism has accumulated $658 million in total value locked (TVL), making it the sixth-largest blockchain, according to DefiLlama. Earlier this year, holders were surprised with a second airdrop, which led to an 11% drop in the price of OP as the circulating supply increased.

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PayPal shares first PYUSD report

Last month, PayPal introduced its stablecoin, PYUSD, which has the potential to be used for global payments. However, according to the first transparency report released by Paxos Trust, the company that issues PYUSD, the adoption of the stablecoin has a long way to go. Despite facing competition with its own problems, PYUSD has only $45.3 million in assets supporting it as of last month, as revealed by the report published last week. This report is the first time the public has been given a glimpse of the assets associated with the $44.3 million worth of PYUSD.

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Other breaking news

• Arbitrum governance voted to distribute up to 50M ARB of DAO-funded incentives
• Crypto outflows reach $455 million over the previous nine weeks
• Sino Global, Coinbase, and Libra launch $60 million Web3 Fund
• FTX sues Sam Bankman-Fried's parents
• UK passes bill to seize stolen crypto

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Wrapping up

In today's Datawallet Daily, we witnessed Ethereum's blockspace taking an unexpected turn towards negative profitability. Meanwhile, Nomura Bank forges ahead in the crypto realm with the debut of its Bitcoin Adoption Fund. Optimism continues its community-focused approach with its third airdrop, and PayPal's PYUSD stablecoin reveals early adoption metrics. As the landscape constantly evolves, we remain committed to delivering the most pertinent updates in the world of crypto and finance.