A smart contract is a piece of code running on a blockchain, and blockchains that support smart contracts are called smart contract platforms. Smart contracts allow for the creation of automated protocols that do not depend on third parties.

Ethereum is the first blockchain to support smart contracts and is currently the most developed smart contract platform.

During its development, Ethereum has undergone numerous updates, some of which have had significant impact on the network's revenue model. The Ethereum revenue model can be divided into three main phases:

1/(2015- Aug 5th, 2021) - The initial phase with the Proof of Work consensus: In this phase, fees generated by the Ethereum network as well as fees paid by users to perform transactions were all returned to miners. Ethereum itself did not generate any revenue.

2/(Aug 5th, 2021- present) - The EIP-1559 update: With the EIP-1559 update, a portion of the ETH fees paid to the network are burned. This model is similar to buyback models for company shares. After the EIP-1559 update, it can be said that Ethereum is generating revenue, although the portion of tokens minted from the network is still higher than the portion of tokens bought back.

Since the deployment of the EIP-1559 update, Ethereum has generated over 8.8 billion USD in revenue, far outpacing other smart contract platforms in terms of revenue generation.

3/(Sep 15th, 2022 - present) - The Merge with the transition to the Proof of Stake consensus mechanism: After The Merge, the Ethereum token inflation rate has decreased by almost 90%. This means that the amount of tokens the network needs to burn to be profitable will be lower.

With the EIP-1559 update and the impact of The Merge, Ethereum inflation rate is nearly 0% and sometime below 0%. This is impressive when compared to Bitcoin's 1.72%/year, Ethereum's 3.5% with the Proof of Work, and higher rates on other chains.

If we consider smart contract platforms as companies, then Ethereum is the only company that used to operate profitably and has chance to maintain that state. This does not even consider the potential for a stronger market in the future with more on-chain activity. With more tokens being burned, it would make the ETH supply in the market increasingly scarce.

Any business model needs to be profitable to sustain itself, so projects that rely on rewarding participants with token inflation will have negative long-term impacts. Conversely, Ethereum's long-term prospects are bright as the law of supply and demand will eventually have a positive impact on the market value of ETH."

In addition, we cannot overlook the scaling solutions that are being deployed on Ethereum, especially Rollups. Currently, in terms of network impact, projects using Rollup are attracting the most value, and in terms of Ethereum's vision, Rollup is the solution with the most support.

The design of Ethereum requires layer 2 solutions to pay a fee when posting a batch of transactions to Ethereum. The amount of ETH burned from these transactions is only about 4%, showing the large potential for the growth of layer 2 in the future.

Ethereum is the only smart contract platform that used to operate profitably and has chance to maintain that state . This difference will become more apparent as the market starts gaining back traction along with the development of layer 2.