Ethereum and Solana On-Chain Activity Rises Despite Token Price Falls

The Ethereum and Solana networks have seen a significant increase in on-chain activity despite their token prices falling by more than half over the past year, according to a recent quarterly staking report from crypto asset manager Bitwise. The disconnect between network fundamentals and market prices has widened as blockchain usage costs have declined, but on-chain activity has increased.

Bitwise's head of on-chain research, Kam Benbrik, noted that there is a 'big disconnect' between the fundamentals of major blockchain networks and market sentiment. He attributed the drop in network revenue to protocol design changes aimed at making block space cheaper and more abundant, rather than weakening on-chain activity.

Institutional inflows stood out in the staking market, with most of the new Ether added to Ethereum validator pools this year coming from institutional demand, including exchange-traded funds and corporate treasury operations. Staked Ether reached a record 40.2 million ETH at the end of the second quarter, accounting for about one-third of total supply.

Benbrik also noted that most staking rewards came from new token issuance rather than network fees, with newly issued tokens accounting for 93% of Ethereum staking rewards and more than 90% of Solana staking rewards. He warned that token holders who do not stake could face dilution from new issuance.