Ethereum, Solana and Avalanche get busier and cheaper even as token prices fall: Bitwise

Ethereum, Solana and Avalanche became busier and cheaper to use over the past year as staking participation remained high and institutional involvement grew. Yet ETH, SOL and AVAX have each fallen by roughly half or more during the same period.

"We've seen a big divergence between network fundamentals and market sentiment because, obviously, prices are down compared to 2025," Bitwise Head of Onchain Research Kam Benbrik said on Monday during an interview. "But what we’re seeing onchain is, first, that blockchains are becoming cheaper, and second, onchain activity is actually increasing."

Bitwise recently published its first-ever quarterly staking report. Although activity rose, with transactions costing less, revenues declined sharply, noticeably down across Ethereum (ETH), Solana (SOL), and Avalanche (AVAX).

"The decline in revenue was driven mainly by protocol design, as networks made blockspace cheaper and more abundant. Weaker demand played a part in some cases, but it was not the general trend," Bitwise said in its report.

Institutional staking of Ethereum

Bitwise also examined the growing institutionalization of staking, with ETFs, corporate treasuries and other large holders responsible for most of the ETH added to the validator pool this year.

The researchers point out, however, that because most staking rewards on Ethereum and Solana are funded through new token issuance, holders choosing not to stake risk dilution. Additionally, increasing participation in staking means that rewards are spread thinner, pushing yields lower.

A record 40.2 million ETH, representing one-third of the cryptocurrency’s total supply, was staked at the end of the second quarter. "When we looked at where the inflows are coming from onchain, they’re really coming from institutions," said Benbrik.

On Monday, Bitmine said it was staking over 4.9 million of the roughly 5.8 million ETH it owns. The company is the largest Ethereum-based treasury.

According to Bitwise's second-quarter report, Ethereum’s annualized staking yield registered at 2.84% during the second quarter, compared with 6.25% for Solana. Yet newly issued tokens accounted for 93% of Ethereum’s staking rewards and more than 90% of Solana’s, meaning most of the headline yield came from token issuance rather than fees paid by network users.

Benbrik said Bitwise's clients stake both to gain exposure to the yield and support the underlying network.

"We're also seeing people that would like to get exposure to both the staking yield and onchain activity, and would like to take actions onchain. For those types of clients, you have solutions like liquid staking," he added. "They can get exposure to the underlying staking yield, but they can also use that token to do different things in DeFi. They can provide liquidity. They can deposit and borrow against that collateral."