Short Ether ETFs Lead Returns as Ethereum Network Revenue Drops Post-Dencun Update

ETHD and ETQ surged over 200% in 2025, tracking Ether’s price drop with double-leveraged inverse exposure. Ethereum’s network revenue dropped 95% after the Dencun update reduced transaction fees across Layer 1 and Layer 2. Two exchange-traded funds designed to profit from Ether’s decline have led returns among ETFs so far this year. The ProShares UltraShort Ether ETF (ETHD) and the T Rex 2X Inverse Ether Daily Target ETF (ETQ) posted gains of 247% and 219% respectively, according to Bloomberg Intelligence. Source: Investing Both funds use derivatives to offer double inverse exposure to Ether, increasing in value when the asset falls. Source: Tradingview Ether has dropped approximately 54% since January. It is currently trading near €1,437. The drop follows a downward trend that began in early 2024. ETF analyst Eric Balchunas shared the performance data on platform X, stating that these funds have benefited directly from the market’s direction. The best performing ETF this year is the -2x Ether ETF $ETHD, up 247%. #2 is the other -2x Ether ETF. I was sure it would be $UVIX (2x VIX), but that’s #3. Brutal. pic.twitter.com/e49QOPtgmb — Eric Balchunas (@EricBalchunas) April 9, 2025 Leveraged inverse ETFs do not always match the daily movement of the assets they track, especially during extended market swings. However, their returns this year reflect the sharp decline in Ether and growing interest from traders seeking short exposure. Source: DeFiLlama Ethereum remains the blockchain with the highest total value locked, at around $46 billion according to DefiLlama. Yet, the financial output of its network has weakened. In March 2024, Ethereum implemented the Dencun update, which cut transaction fees by a large margin. Since then, the network has struggled to regain earlier income levels. I am offering a different perspective that Ethereum is moving beyond a settlement layer, its building out a data availability economy The conversation around Ethereum’s fee model is changing. Right now, fees on “blob space”, the data availability fees that Layer 2 solutions pay… pic.twitter.com/5JEpYRUHKp — arndxt (@arndxt_xo) April 1, 2025 Data shows that Ethereum’s transaction fee revenue fell by roughly 95% after the update. The changes were intended to lower transaction costs through better data management, especially for Layer 2 rollups. However, the shift has reduced the network’s revenue from transaction fees. Layer 2 networks like Arbitrum and Base now process a growing share of Ethereum transactions. In the final week of March, Ethereum collected only 3.18 ETH in fees from these external chains, according to Etherscan. The growing use of L2s has not translated into a steady revenue stream for Ethereum. Michael Nadeau, founder of The DeFi Report, said on X that transaction volumes on Layer 2s would need to rise over 22,000 times to restore Ethereum’s earlier fee levels. This projection shows a wide gap between increased use of in a formal or creative style, maintaining a 500 word count. You must only respond with the modified content. Change the tone of my title “ETHD and ETQ surged over 200% in 2025, tracking Ether’s price drop with double-leveraged inverse exposure. Ethereum’s network revenue dropped 95% after the Dencun update reduced transaction fees across Layer 1 and Layer 2. Two exchange-traded funds designed to profit from Ether’s decline have led returns among ETFs so far this year. The ProShares UltraShort Ether ETF (ETHD) and the T Rex 2X Inverse Ether Daily Target ETF (ETQ) posted gains of 247% and 219% respectively, according to Bloomberg Intelligence. Source: Investing Both funds use derivatives to offer double inverse exposure to Ether, increasing in value when the asset falls. Source: Tradingview Ether has dropped approximately 54% since January. It is currently trading near €1,437. The drop follows a downward trend that began in early 2024. ETF analyst Eric Balchunas shared the performance data on platform X, stating that these funds have benefited directly from the market’s direction. The best performing ETF this year is the -2x Ether ETF $ETHD, up 247%. #2 is the other -2x Ether ETF. I was sure it would be $UVIX (2x VIX), but that’s #3. Brutal. pic.twitter.com/e49QOPtgmb — Eric Balchunas (@EricBalchunas) April 9, 2025 Leveraged inverse ETFs do not always match the daily movement of the assets they track, especially during extended market swings. However, their returns this year reflect the sharp decline in Ether and growing interest from traders seeking short exposure. Source: DeFiLlama Ethereum remains the blockchain with the highest total value locked, at around $46 billion according to DefiLlama. Yet, the financial output of its network has weakened. In March 2024, Ethereum implemented the Dencun update, which cut transaction fees by a large margin. Since then, the network has struggled to regain earlier income levels. I am offering a different perspective that Ethereum is moving beyond a settlement layer, its building out a data availability economy The conversation around Ethereum’s fee model is changing. Right now, fees on “blob space”, the data availability fees that Layer 2 solutions pay… pic.twitter.com/5JEpYRUHKp — arndxt (@arndxt_xo) April 1, 2025 Data shows that Ethereum’s transaction fee revenue fell by roughly 95% after the update. The changes were intended to lower transaction costs through better data management, especially for Layer 2 rollups. However, the shift has reduced the network’s revenue from transaction fees. Layer 2 networks like Arbitrum and Base now process a growing share of Ethereum transactions. In the final week of March, Ethereum collected only 3.18 ETH in fees from these external chains, according to Etherscan. The growing use of L2s has not translated into a steady revenue stream for Ethereum. Michael Nadeau, founder of The DeFi Report, said on X that transaction volumes on Layer 2s would need to rise over 22,000 times to restore Ethereum’s earlier fee levels. This projection shows a wide gap between increased use of” for a more friendly approach. Keep the content length about the same. You must only respond with the modified content.