Disclaimer: Crypto is highly volatile and you could lose all your money, do your own research before investing.
Key Takeaways
- Ethereum transaction activity has hit its lowest point since 2023, signaling reduced on-chain interaction.
- Daily active addresses and gas usage on the Ethereum network have declined significantly in mid-2025.
- Declining DeFi and NFT activity have contributed to reduced demand for Ethereum block space.
- High transaction fees and the rise of Layer-2 networks like Arbitrum and Optimism are diverting users away from mainnet.
- Ethereum’s fundamentals remain strong, but short-term user engagement is waning.
- Institutional interest persists, although retail participation has slowed amid uncertain market conditions.
Introduction
Ethereum has long been the backbone of decentralized finance, non-fungible tokens, and smart contract innovation. Since its inception, the network has grown into the largest programmable blockchain in the world, powering billions in daily value transfer and hosting thousands of decentralized applications.
However, as of mid-2025, Ethereum is experiencing a dramatic slowdown in transaction activity, hitting its lowest level since 2023. This drop signals a shift in user behavior, market sentiment, and the evolving structure of blockchain adoption, particularly among Layer-1 and Layer-2 networks.
Drop in Daily Active Addresses
One of the clearest indicators of Ethereum’s declining transaction activity is the number of daily active addresses. In early 2023, Ethereum regularly saw over 400,000 active addresses per day, with spikes during periods of high market volatility or NFT launches. However, in June 2025, daily active addresses have fallen below 275,000 on several occasions, marking a steep decline in user engagement.
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This reduction in on-chain activity suggests that fewer users are interacting with the Ethereum mainnet directly—whether to send ETH, swap tokens, or engage with decentralized applications. This trend is not isolated, but rather consistent across various wallet demographics and use cases.
Decline in Gas Usage and Fees
Ethereum’s gas fees have historically been a double-edged sword—signaling both high network demand and user frustration. In 2021 and 2022, Ethereum gas prices were frequently cited as a barrier to entry for smaller users. Fast forward to 2025, and while lower gas prices might seem like a win for usability, they also reflect a substantial decline in network usage. Total gas consumption has decreased significantly, with average gas fees often falling below 10 gwei.
This drop is primarily due to fewer DeFi transactions, less NFT minting activity, and a migration of developers and users to Layer-2 solutions and alternative chains.
The Role of DeFi and NFTs in Ethereum’s Decline
Decentralized finance (DeFi) and non-fungible tokens (NFTs) have been the lifeblood of Ethereum’s high transaction volumes in recent years. However, in 2025, both sectors are experiencing a cooling-off period. The DeFi ecosystem, once bursting with innovation and high-yield strategies, is now facing stagnation due to regulatory pressures, reduced capital inflow, and shrinking yields. Similarly, the NFT market—once responsible for massive spikes in gas consumption—has seen a sharp decline in trading volume and interest.
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Fewer new NFT projects are launching on Ethereum, and existing collections are seeing minimal secondary market activity. The slowdown in both of these sectors directly impacts overall transaction levels.
Layer-2 Adoption and the Shift in User Behavior
While Ethereum mainnet is seeing reduced activity, Layer-2 scaling solutions are absorbing much of the transaction volume. Networks like Arbitrum, Optimism, Base, and zkSync offer significantly lower fees and faster confirmation times. These solutions are built on top of Ethereum and help scale the network without compromising its security. However, they also divert user interactions away from the Ethereum base layer. In many ways, this is a sign of maturity for the ecosystem, but it also explains why Ethereum’s mainnet metrics appear weaker.
Instead of using Ethereum directly, users now bridge their funds and operate within Layer-2 environments, contributing to the reduced transaction count on Layer-1.
Staking and HODLing Over Active Participation
Another factor contributing to Ethereum’s low transaction activity is the rise of passive engagement. With the transition to Proof-of-Stake (completed in 2022), Ethereum allows holders to earn rewards through staking rather than active use. As of mid-2025, over 27% of the total ETH supply is locked in staking contracts, rendering it unavailable for daily transactions.
Many investors now view Ethereum as a long-term store of value or yield-generating asset rather than a token for regular utility. This behavioral shift—from active participation to passive investment—also contributes to the quieting of on-chain activity.
Market Sentiment and Broader Crypto Trends
The broader cryptocurrency market plays a crucial role in determining on-chain behavior. When the market is bullish, users are more inclined to swap tokens, mint NFTs, or engage in speculative DeFi strategies. Conversely, during bearish or uncertain periods, users retreat, and transaction counts drop.
In 2025, the crypto market is in a transitional phase. Although the extreme volatility of 2021 and 2022 has subsided, global economic factors, pending regulations, and stagnating innovation have tempered enthusiasm. Ethereum’s low transaction activity is part of a wider cooling-off trend impacting the entire crypto space.
Institutional Interest Remains Resilient
Despite the drop in retail activity, institutional interest in Ethereum remains steady. Several major financial institutions continue to accumulate ETH, and Ethereum-based infrastructure remains a key component in tokenized assets and blockchain experiments. Central banks and corporations are exploring Ethereum’s capabilities for real-world asset tokenization, particularly with the ERC-3643 and ERC-1400 standards designed for regulatory compliance.
The decline in retail usage may not fully reflect Ethereum’s long-term value proposition, especially as institutions develop permissioned environments on top of Ethereum or its scaling solutions.
Ethereum Development Activity Remains Strong
It’s important to note that Ethereum’s development community remains highly active, even as transaction metrics decline. Work continues on Ethereum Improvement Proposals (EIPs) aimed at reducing costs, enhancing scalability, and enabling new use cases. The upcoming implementation of “Verkle Trees” and ongoing roll-up enhancements are expected to significantly improve performance in the future.
Moreover, Ethereum’s developer ecosystem continues to attract funding and talent, signaling that innovation is far from dead. While on-chain activity is down, the foundation for future growth is being actively built.
Conclusion
Ethereum’s current lull in transaction activity may appear concerning at first glance, but it is not necessarily a sign of weakness. Instead, it reflects a complex interplay of evolving user behavior, infrastructure upgrades, and shifting market dynamics. The rise of Layer-2 networks, the maturation of staking culture, and reduced retail speculation all contribute to the observed decline on Ethereum’s mainnet. Yet, under the surface, development remains robust, institutional interest endures, and the network’s long-term roadmap continues to unfold.
For long-term investors and builders, the current slowdown offers a period of reflection and recalibration. Ethereum is not just a vehicle for speculation—it is a decentralized platform undergoing a transition from experimental chaos to scalable, sustainable utility. While 2025 may be remembered as a year of relative quiet on-chain, it may also serve as the foundation for Ethereum’s next wave of innovation and adoption.