 ▲ Ethereum (ETH) |
Ethereum (ETH) is facing a paradoxical crisis in which a technical upgrade aimed at improving scalability has instead heightened security threats and shaken the foundation of its tokenomics.
Guy Turner, co-host of cryptocurrency-focused YouTube channel Coin Bureau, uploaded a video on March 10 (local time) providing an in-depth analysis of the critical side effects caused by Ethereum’s Fusaka upgrade. Turner pointed out that after the Fusaka upgrade doubled the gas limit from 30 million to 60 million units in December 2025, transaction fees plunged by around 90%—far exceeding initial expectations—turning the network into a breeding ground for scam transactions.
According to reports, 95% of the newly increased active wallets following the Fusaka upgrade were created for the purpose of address poisoning attacks. The share of dust transactions among total transactions surged sharply, rising from 9.5% in November last year to over 22% in February this year. Taking advantage of lower gas fees, attackers reportedly generated more than $50 million in illicit gains within just two months, with total losses from address poisoning attacks estimated at $348 million to date.
These changes have significantly weakened Ethereum’s fee-burning mechanism, a key tool designed to enhance its economic value. The gas fee formula previously designed by Ethereum founder Vitalik Buterin no longer properly reflects the current Layer 2 ecosystem, effectively collapsing the fee structure and leading to reduced validator revenues. Ethereum’s staking yield currently stands at approximately 2.7% annually, lower than the 4.1% yield on U.S. Treasury bonds, diminishing its investment appeal. Market analysts widely believe that Ethereum has reverted to an inflationary state of 0.8%.
Tom Lee, chairman of Bitmine, remains bullish on Ethereum, citing continued growth in its utility. However, market sentiment appears skeptical. Even Buterin recently sold 16,000 ETH and 19,000 ETH in succession, declaring that the Ethereum Foundation is entering a period of moderate tightening. Another risk factor is that a significant portion of Ethereum’s staking demand is being artificially sustained by capital from a single company, Bitmine. Institutional investors may increasingly turn to competing networks such as Solana (SOL), where both security and profitability conditions appear more favorable.
Concerns are also mounting over the upcoming Glamsterdam upgrade scheduled for the first quarter of 2026. The upgrade plans to further raise the gas limit from 60 million to 200 million units, a move that could make address poisoning attacks even easier while placing additional pressure on staking yields. If Ethereum fails to promptly address the security and economic flaws hidden behind its push for network scalability, it may face a critical juncture that threatens its position as the second-largest cryptocurrency after Bitcoin (BTC).
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