According to reports from Token Terminal, transaction fees on Ethereum L1 have dropped to record lows following the Glamsterdam upgrade. The upgrade, which cut network fees by 78%, is now clearly reshaping Ethereum's revenue structure on-chain. As reported by DeFiLlama, network revenue has been declining steadily since peaking at $366.63 million in Q3 2025, with Ethereum closing Q1 2026 with $260 million in revenue. This revenue compression comes despite the network's strong underlying activity metrics.
Despite the fee reductions, Ethereum continues to demonstrate robust network activity. According to on-chain data, Ethereum's monthly transaction count has climbed to a new all-time high, nearing 80 million transactions. This strong network activity remains even as fees and revenue continue trending lower, suggesting that lower fees are not translating into weaker usage but rather pulling more users on-chain by making Ethereum cheaper to use. The fee compression strategy is becoming a strong reflection of Ethereum's underlying network fundamentals.
From a technical perspective, ETH is down around 6.2% in May and continues to underperform Bitcoin across most major timeframes. The declining revenue and falling fees make ETH's recent weakness look justified, but the on-chain data presents a different narrative. The current technical structure appears increasingly mispriced relative to the network's underlying on-chain strength, as the decline in revenue looks more like a byproduct of Ethereum's evolving fee model rather than a sign of fading demand. This disconnect between technical performance and network fundamentals raises questions about ETH's genuine undervaluation.
