In 2020, the transaction fee on both Bitcoin and Ethereum has been soaring, especially after the reward halving.
On Ethereum, the fees went as high as $0.90 on March 12 the day crypto market had a massive sell-off.
Now, since mid-April, when the fees were at $0.078, it has been gradually increasing. On May 14th, it jumped to $0.5253 and is currently above $0.50.
As such, the notional transaction fee volumes on the Ethereum network rose sharply to nearly year-on-year highs.
While the fees remain low relative to traditional payment and financial processors such as Visa and Mastercard, the Ethereum network has been recording a surge in fee-based volume as the number of transactions has risen.
“For the last week ethereum tx fee revenue has exceeded most estimates of what PoS validator rewards will be. Rollups+sharding are coming (loopringorg zk rollup already on mainnet!) to increase capacity, but even today this is an important milestone for economic sustainability,” shared Ethereum co-founder Vitalik Buterin.
In 2020 so far, Ethereum fee-based ‘revenues’ totaled at more than $15 million, as per TradeBlock.
Ethereum developer, Eric Connor also took to Twitter to share some data, over the past week, the Ethereum network generated about 1900 ETH in fees per day, or 700k ETH annualized.
He further analyzed that with 10 million ETH staked in PoS, the network will produce 575k ETH a year in the future.
“With fee burn in eth2, it's very likely that we will eventually get to negative annual issuance,” he said.
This recent jump in fees is because of the increase in activity on the Ethereum network which is driven by stablecoin adoption and usage. Nearly all major stablecoins are also ERC-20 tokens.
“In the first quarter of 2020, stablecoin market caps rose to all-time highs as market participants clamored for the digital USD pegged assets (in part driven by a flight to safety during the COVID-19 crash).”
2.2% of all ETH in Existence Long on One Exchange
About 1% of Ether’s total supply, one million ETH were added on this one exchange this spring which has now risen to 2.2% of supply.
What. Is. Happening.
— Jonny Moe (@JonnyMoeTrades) May 20, 2020
While bitcoin balance on Bitfinex exchange dropped a whopping 52% since Black Thursday, Ether’s has been on a record rise, adding $1.5 million.
Currently, Bitfinex is the top holder of Ether, as per Etherscan. Bitfinex is also the sister company of Tether Treasury that issues all the USDT. Tether’s market cap has surpassed $9 billion in 2020 and $5.7 billion out of it are on Ethereum blockchain.
These long traders might get rewarded in the near future as according to trader Josh Olszewicz, Ether can see an uptrend to $750 within the next few months.
It’s time ! https://t.co/NzZDZbtnVl
— Wolf (@IamCryptoWolf) May 18, 2020
At the time of writing, ETH has been trading at just above $200 in red.