Ethereum Is Overtaking Bitcoin In Daily Transaction Fees; Is USDt’s Omni to ERC20 Switch The Cause?
- ETH fees & miner revenue shot up
- Transaction fees a strong signal of overall network health and long-term sustainability
- USDT-ETH transactions account for 25% of all Ethereum transactions
However, it won’t be the first time.
Transaction fees represent real network demand and usage but some argue high fees could be detrimental to a crypto network.
However, in the long term, as block reward decreases, fees would become a large percentage of total miner revenue so as Coin Metrics states in its latest issue, “Total fees therefore are a strong signal of overall network health and long-term sustainability.”
Over the past thirty days, while BTC’s fees have come crashing down, ETH’s have shot up.
USDT on Omni has been growing for most of 2019, hitting new all-time highs around April 2019, peaking at 91,513 on August 7th, but since then USD-ETH has skyrocketed.
Ethereum-based Tether hit a new ATH of 187,912 daily transactions on Sept. 9. USDT-ETH transactions have risen so much so that they accounted for 25% of all Ethereum transactions on Sept. 8th.
Eth has also started to climb ahead of BTC over the last 30 days as a percentage of total miner revenue (fees plus block rewards).
A similar pattern could be seen in total daily gas that reached an ATH, likely driven by USDT-ETHs recent surge as Tether is the biggest gas spender out of all Ethereum contracts over the last 30 days.
“Gas usage on Ethereum hit ATH,” stated Glassnode, on-chain data platform. “Tether has been on the rise, with a recent peak of 20% of all network fees used to transfer USDT. While less gas is used to move ETH, the bulk is consumed by non-standard contracts, that require heavier computations.”
2/ Transaction activity paints a similar picture.
More than 25% of transactions were used to move #Tether last week, up from less than 1% in June.
— glassnode (@glassnode) September 16, 2019
Last month, when Ether’s network utilization surged to 90% level, Vitalik Buterin, Ethereum co-founder said as utilization increases, transaction costs would follow suit that would mean corporate and institutional users might hesitate to use the network.
In the longer term, Ethereum 2.0’s sharding will fix these issues, he said while in the short term, he proposes increasing the gas limit, that will effectively increase the blocksize.
As we reported, 50 percent of the miners are in support of this and with Istanbul software upgrade — postponed from its initial early October release date — coming up as well, Ethereum might resolve this issue for now.