Ethereum’s success hinges on increasing data availability fees and enhancing L1 DA capacity
Ethereum (ETH) is currently trading at approximately $1,600. The potential for ETH to increase in value hinges on its ability to generate fees, which primarily comes from three sources: execution, MEV (Miner Extractable Value), and data availability (DA). Key points include:
- Execution fees are largely controlled by Layer 2 solutions.
- MEV fees are decreasing due to improved user strategies.
- Data availability fees remain a crucial source of value for Ethereum as rollups expand.
Currently, Ethereum has generated only $26 million from DA since the introduction of EIP-4844 in March 2024. Factors affecting this include:
- Low DA fee generation due to supply constraints.
- Competition from alternative DA providers like Celestia, EigenDA, and Avail.
- Celestia offers significantly lower prices, attracting demand away from Ethereum.
While Ethereum plans to expand its DA capacity through upcoming hard forks, it faces challenges in generating substantial revenue from DA amidst growing competition.