Two Blockchains Dominate Transaction Fees
Bloomberg crypto analyst Jamie Coutts reveals that Ethereum and Tron Network have captured the majority of transaction fees among smart contract and Proof-of-Stake (PoS) blockchains over the past year. Ethereum takes the lead with 57% of total transaction fees, while Tron follows closely behind with 31%. According to Coutts, these two chains account for an astonishing 88% of all transaction fees, leaving the remaining chains to compete for a mere 12%.
The Challenges Faced by PoS Blockchains
Coutts highlights the primary challenges faced by most PoS blockchains. These include an oversupply of blockspace, inflationary supply schedules, undisclosed supply indicators, and subpar tokenomics. Despite these obstacles, Coutts believes that there is a long-term structural uptrend in blockspace demand.
ETH and TRON’s Transaction Fee Rivalry in 2023
Ethereum recently experienced its lowest average transaction fee of 2023, dropping to $1.15 per transaction on September 24. This is the lowest level since December 2022. On the other hand, TRON almost doubled Ethereum’s trading activity in June.
In April, Token Terminal reported that Ethereum’s daily transaction fees were significantly higher than TRON’s, despite TRON holding the second position. In the first half of 2023, Ethereum generated $743 million in transaction fees, while TRON generated $282 million. In comparison, the Bitcoin network only generated $80 million during the same period.
Hot Take: The Duopoly of Ethereum and Tron in Transaction Fees
Ethereum and Tron have emerged as the dominant players in transaction fees among smart contract and PoS blockchains. With a combined share of 88%, these two chains leave little room for others to compete. While Ethereum’s average transaction fee reached its lowest point in 2023, TRON has been gaining momentum and challenging Ethereum’s trading activity. As the demand for blockspace continues to grow, it remains to be seen how other blockchains will address the challenges they face and strive to gain a larger share of transaction fees.
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