Ethereum, Solana (SOL) and Avalanche (AVAX) are showing a widening gap between network fundamentals and market sentiment, according to Bitwise head of on-chain research Kam Benbrik. Over the past year, token prices for all three have been cut roughly in half, even as on-chain data points to a different trend.
Compared with the stronger market seen in 2025, prices are clearly weaker now. But on-chain activity has kept growing, while transaction costs have become cheaper. Bitwise said that split has become one of the clearer features of the current market.
Lower fees and higher activity, but weaker revenue
In its first quarterly staking report, Bitwise said Ethereum, Solana and Avalanche all saw revenue fall sharply even as on-chain activity increased and transaction costs moved lower.
The firm said the decline in revenue was not mainly the result of weak demand. Instead, it linked the drop to protocol design changes across major public blockchains, including larger block capacity and lower transaction fees, which have made the networks cheaper and easier to use.
Bitwise said revenue has fallen largely because of those protocol changes. It added that some networks have seen slower demand, but that is not the main trend across the broader market.
Institutions are taking a bigger role in Ethereum staking
Another key point in the report is the rising role of institutional investors in Ethereum staking. Bitwise said most of the ETH added to Ethereum’s validator pool this year came from spot exchange-traded funds, corporate asset reserves and other large institutional holders.
Researchers at the firm also said staking rewards on Ethereum and Solana mostly come from new token issuance. That means holders who choose not to stake face dilution. At the same time, as more capital enters staking pools, rewards are spread across a larger base and overall yields decline.
Ethereum staking rate hits a record
By the end of the second quarter, 40.2 million ETH had been staked, equal to one-third of Ethereum’s total supply, a record high. Benbrik said Bitwise’s tracking of on-chain fund flows shows clearly that the capital entering staking is coming from institutions.
The report cited Bitmine, described as the world’s largest Ethereum treasury company, as one example. Out of roughly 5.8 million ETH held by the company, 4.9 million ETH has already been put into staking.
According to Bitwise’s second-quarter report, Ethereum’s annualized staking yield was 2.84%, while Solana’s was 6.25%. The firm also said 93% of Ethereum staking rewards and more than 90% of Solana staking rewards come from new token issuance rather than transaction fees paid by users.
Liquid staking remains part of the appeal
Benbrik said Bitwise clients stake not only to earn yield, but also to support the underlying networks. He added that many investors also want to keep their capital liquid while collecting staking returns so they can continue using funds elsewhere on-chain.
For that reason, liquid staking has become a practical option for some investors. Benbrik said those protocols let users earn the base staking yield while also using receipt tokens in DeFi for lending, liquidity provision or borrowing against them as collateral, increasing capital efficiency.