How Cheaper Fees Could Drive Ethereum Growth

Why It Matters

Lower transaction costs could unlock new use cases and boost overall fee revenue, reshaping ether’s valuation and reinforcing its position as the leading smart‑contract platform.

Key Takeaways

• Weekly fees fell to $10 million after Dencun upgrade.
• Monthly active users doubled despite fee drop.
• Base‑case ether price projected $4,935 by 2031, 16% return.
• Glamsterdam upgrade (2026) could raise gas limit 3.3× to 200 million.
• DEX trading is largest fee source; stablecoins second.

Pulse Analysis

The sharp decline in Ethereum’s fee revenue after the Dencun upgrade has sparked debate about the network’s economic health, but the simultaneous surge in monthly active users suggests a decoupling of fee volume from user adoption. Cheaper gas costs lower barriers for on‑chain activity, potentially spurring novel applications in DeFi, gaming, and NFTs. This dynamic mirrors the Jevons paradox, where reduced resource costs drive higher overall consumption, hinting that Ethereum’s fee base could rebound as new demand materializes.

CoinShares’ valuation framework separates ether’s cash‑flow component—driven primarily by decentralized‑exchange trading and stablecoin transfers—from a monetary‑premium layer reflecting its status as the default collateral for the ecosystem’s largest smart‑contract suite. With stablecoins representing roughly 52% of a $300 billion supply on Ethereum, and projected ETF inflows reaching $25 billion annually by 2031, the model justifies a base‑case price near $5,000, delivering a 16% annualized upside. The bull scenario pushes ether to $14,135, contingent on a 35% DEX share and a nine‑fold rise in global stablecoin supply.

Looking ahead, the 2026 Glamsterdam upgrade promises to expand block capacity from 60 million to 200 million gas units, a 3.3‑times increase that could accommodate a surge in transaction volume without reigniting high fees. If the network can sustain low costs while scaling, fee revenue may climb even as per‑transaction prices stay modest. Investors will watch how these technical enhancements intersect with macro trends—such as institutional ETF adoption and cross‑chain competition—to determine whether ether’s price trajectory aligns with CoinShares’ optimistic forecasts.