On some particularly busy days, Ethereum’s miners generated greater profits from the commissions paid by users than from block rewards.
The commissions obtained by the Ethereum (ETH) miners in 2020 are almost double those of Bitcoin (BTC), with a value of 276 and 146 million dollars respectively.
A graph published by Coinmetrics shows that Ethereum commissions have significantly increased especially in the last part of the year, in parallel with the launch of the token compound. The overall value of the Ethereum commissions reached the Bitcoin value on August 12, and then continued to grow in a dizzying way.
This is a marked change from previous years, when the overall commission value on Bitcoin was far greater than any other network. Just think that in 2019 Bitcoin commissions were five times higher than those of Ethereum.
Already in June Cointelegraph had reported an increase in daily revenue for Ethereum miners. The activity on the network has increased, and with it also the average cost of commissions: this has obviously boosted the profits of the miners. Between August and September Ethereum broke all previous records, becoming de facto unusable for some network participants.
The reason for this exponential growth is probably related to the boom in decentralized finance and yield farming, although stablecoin transfers and alleged Ponzi schemes represent a significant portion of the network activity.
It is likely that once the euphoria around DeFi has subsided, the network will also return to normal – similar to what happened in the cryptocurrency market during 2018.
It is interesting to note that on some particularly busy days the Ethereum miners generated more profits from the commissions paid by users than from block rewards. Since May, commissions have accounted for more than 10 percent of miners‘ revenue – a figure only reached a few times in the history of ETH.
This could be a potentially rewarding development for ETH HODLers in light of the EIP-1559 proposal, which will introduce a fee burn mechanism. In other words, during periods of high activity, the rate of money issuance would actually be reduced.
As far as Bitcoin is concerned, increasing the cost of fees will be crucial to ensure the future of the network, as block rewards will decrease more and more until they disappear completely. However, in the last few years the cryptocurrency industry has started to move away from BTC, in favor of stablecoin and DeFi based use cases. Although the use of Bitcoin still remains very high, losing its domain over the other blockchain could lead to catastrophic results in the long run.