- JPMorgan says Ethereum’s post-Fusaka surge may be temporary, citing past upgrades that failed to deliver sustained growth.
- Ongoing migration to Layer 2 networks and rising competition from faster chains like Solana continue to limit main-chain demand.
- The decline of speculative activity and capital moving to application-specific blockchains has weakened Ethereum’s long-term usage and economics.
JPMorgan analysts say Ethereum’s recent surge in activity following the Fusaka upgrade may prove temporary, warning that the same constraints that have limited sustained usage in recent years remain unresolved.
The Fusaka upgrade, which went live on 3 December, increased Ethereum’s data capacity by raising the maximum number of blobs per block from 15 to 21, leading to an immediate reduction in transaction fees. That fall in fees coincided with a short-term rise in active addresses and transaction volumes across the network.
Despite the initial improvement, JPMorgan questioned whether the rebound can endure over time, noting that previous Ethereum upgrades delivered similar bursts of activity that later faded.
Analysts led by Nikolaos Panigirtzoglou said historical patterns show upgrades have not resulted in lasting increases in network usage. They attributed this in part to the continued migration of activity away from Ethereum’s main chain toward Layer 2 networks such as Base, Arbitrum, and Optimism.
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Competitive Pressures Intensify
Using CryptoRank data, the analysts highlighted that Base alone now accounts for roughly 60%–70% of total revenue generated across all Ethereum Layer 2 networks combined. That shift has reduced demand on Ethereum’s base layer and weakened fee generation on the main chain.
At the same time, alternative blockchains offering faster and cheaper transactions, including Solana, have captured substantial market share from Ethereum.
JPMorgan also pointed to the fading of speculative activity that previously supported network growth during the 2021–2022 cycle, when NFTs, ICOs, and memecoins drove transaction volumes higher.
Much of that activity has since declined or migrated to other chains, removing a key source of demand. Analysts added that capital has increasingly flowed into application-specific blockchains, such as Uniswap’s Unichain and dYdX’s independent network, further diluting Ethereum’s economic activity.
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