Fees

L1 Ethereum Network Fees Drop to Levels Not Seen in Over 2 Months, L2 Fees Follow

17/05/2022 by Idelto Editor

Ethereum network fees have dropped a great deal this week, sliding under $10 per transaction to levels not seen since March 10, 2022. On May 17, the average ethereum transfer fee is 0.0027 ether or $5.68 per transaction. The cheaper fees on layer one (L1) have made it so layer two (L2) fees have been between $0.02 and $1.13 per transfer.

Ethereum’s Onchain Fees Slide Lower Following a Brief Spike Last Week

This week is an optimal time to send ether or use the Ethereum network to swap coins as onchain transfer fees have dropped below the $10 mark. In fact, ether fees on average on May 17, 2022, are roughly around 0.0027 ether or $5.68 per transaction.

L1 fees on Ethereum have not been this low in 68 days, or since March 10. The lower fees follow a brief spike that took place during the Terra blockchain carnage on May 12, as fees were $31.19 per transfer on average that day.

With average network fees down this week, both median fees using L1 and L2 have dropped a great deal as well. At the time of writing on Tuesday morning (ET), the median network fee to transact on Ethereum is 0.0012 ether or $2.59 per transfer.

Median fees have dropped as low as $1.01, according to etherscan metrics on Tuesday. Etherscan data indicates that an Opensea sale could cost around $9.72 today, a decentralized exchange (dex) swap will cost $8.86, and transferring an ERC20 token will cost $2.60.

Ethereum’s L2 Fees Follow Drop in Onchain Transfer Costs

As usual, because onchain fees are cheaper, L2 fees have also seen a significant drop over the last five days since May 12. For instance, it costs roughly $0.02 per transfer using the Metis Network and roughly $0.10 to swap tokens.

While Metis is the cheapest L2, Loopring transfer fees are only $0.03 per ether transfer, and swapping tokens via Loopring will cost around $0.52. Zksync transfers are around $0.05 on Tuesday and swapping a coin will cost $0.13. The most expensive L2 today is Arbitrum One, as transfer fees are around $0.25 and a coin swap on Arbitrum is around $0.35.

The lower ether fees follow the network’s all-time hashrate high on May 13, 2022, at block 14,770,231. The network’s computational power hit 1.27 petahash per second (PH/s) that day, and continues to ride high.

Ethereum’s value has lost 41.8% year-to-date but ETH is still up over 482,570% since October 20, 2015, or roughly six years ago. ETH’s market valuation is 18.4% of the entire crypto economy’s net USD value, with a market capitalization of around $253 billion.

What do you think about Ethereum network fees sliding to new lows not seen in over two months? Let us know what you think about this subject in the comments section below.

So What If Bitcoin Miner’s Fee Revenue Is Low?

05/05/2022 by Idelto Editor

Much discussion has centered around the implications of decreasing fee revenue for bitcoin miners — why is it happening and what does it mean?

Introduction

Revenue for bitcoin miners from transaction fees is dropping to record lows, and fierce debates over the importance and long-term effects of this data are raging online. Current fee revenue represents barely 1% of total earnings for miners, a significant drop from the height of the latest bullish market cycle when, in February 2021 for example, fees were over 13% of monthly revenue. This data has been the subject of intense disagreement on Twitter as everyone from decentralized finance researchers to Bloomberg journalists to professional cryptocurrency traders weigh in on the doom (or lack thereof) signaled for bitcoin by low fee revenue.

This article provides an overview of the latest data on bitcoin fee revenue and answers the question of whether it matters in the short or long term that fee revenue as a percentage of total earnings is low and dropping.

Current Fee Revenue Data

Even though the latest batch of heated debates about the significance of fee revenue have only appeared in the past few weeks, transaction fee revenue for miners has been relatively low for several consecutive months. The line chart below visualizes network fees as a percentage of monthly mining revenue. From early summer 2020 to spring 2021, fee revenue sustained a strong upward growth trajectory. Things quickly changed last summer though around the time China banned bitcoin mining. Fee revenue has yet to recover.

Current fee revenue levels are not unprecedented though. The above chart shows similar levels on a percentage basis throughout the bear market of 2018 and 2019.

And miners aren’t necessarily complaining. Every month since August 2021, their total monthly revenue has surpassed $1 billion, and April 2022 shows no signs of bucking that trend. The bar chart below shows total monthly revenue (subsidies and fees) paid to miners each month for the past five years. Fee revenue is represented in orange on top of each bar, and sizable fluctuations in the dollar amount of fees paid to miners are obvious.

But miners are still making money for securing the network and processing transactions. Sure, mining is getting more competitive as large and small miners alike continue adding more hash rate to the network. However, aggregate mining revenue is still substantial, thanks to the Bitcoin protocol’s mining subsidy, contributing to the already large stashes of coins plenty of miners have stockpiled.

Why Are Fees Down?

The first and most obvious question to ask about bitcoin fee revenue is: Why is it low?

For context, fees represent one of a two-part reward system for miners servicing the Bitcoin network. Fee revenue varies based on network usage, so when fewer people use Bitcoin, miners earn less fee revenue. The other part of mining payouts is the block subsidy, a fixed amount of bitcoin paid every block which is famously halved roughly every four years. Eventually (meaning, a couple centuries from now), the subsidy will drop to essentially zero, which leaves transaction fees as the only source of revenue for miners who secure Bitcoin.

Looking a couple hundred years into the future, the obvious potential problem is if the subsidy is gone and fee revenue is still low, miners don’t get paid and a key part of Bitcoin’s security incentives evaporates. This specific incentive is typically called Bitcoin’s security budget, which represents the total amount of money the network pays miners. Put differently, the security budget is how much every Bitcoin user, in aggregate, pays for mining as a basic service to keep the network running and secure from attacks.

The line chart below visualizes some of the fee revenue data contextualized with daily transaction levels on Bitcoin. The precipitous drop in fee revenue is obvious, and at the same time, transaction levels are flat, at best, following a noticeable dip throughout most of 2021.

The simplest answer, therefore, to the question about why fees are low is because Bitcoin is being used less than it was before. So, why is Bitcoin used less? This question is harder to answer. Reasons for lower present use of Bitcoin range from increased Layer 2 use (e.g., Lightning Network or Liquid) to general boredom as price volatility continues dropping.

Is Low Fee Revenue A Problem?

In the short term, effects of low fee revenue mostly consist of sporadic Twitter drama as critics try to extrapolate today’s fee levels into predictions about Bitcoin’s sustainability decades and centuries from now.

Bitcoin is currently in the middle of only its fourth halving period with a subsidy payout of 6.25 BTC per block. The subsidy will still be above 1 BTC for two more halving periods and above 0.1 BTC for at least 20 more years. Even though regularly monitoring network health is important, alarmism over the current state of fee revenue is premature.

All the available fee data represents an unhelpfully small amount, when considering the future lifespan of the Bitcoin network. Fee revenue is also highly volatile, which makes fee revenue predictions even harder to accurately calculate. At the height of the latest bull market, fee revenue represented roughly 15% of total monthly mining revenue. Today, that level has dropped to barely 1%. Will those large fluctuations continue? No one knows for sure.

In short, current fee revenue gives no reason for panic, but ignoring this important data is also unjustified.

Will Fees Rebound?

The simplest and historically most reliable reason for fee revenue to rebound is another red-hot bullish market. But at a deeper level, the only way fees increase is if demand for Bitcoin block spaces also increases. Fees go up when people want to use Bitcoin. Options for cultivating this demand range from simply expanding adoption and daily use of bitcoin for payments to more controversial and complex efforts like building a decentralized finance ecosystem on the Bitcoin blockchain.

And it’s okay for future fee revenue to be an open question — for now. Nearly all of the doom and gloom broadcasted on social media about low Bitcoin fees is poorly substantiated given the small data set of historical fee revenue available to analysts and the sheer amount of time until the mining subsidy drops so low as to become irrelevant, making fees the only source of mining revenue.

If nothing else, Bitcoin has proven itself to be a reliant piece of technology. For the past decade, fee revenue has gone up and down. What fees will be 100 years from now is, quite simply, a wide-open question.

This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Following a Brief Fee Spike, Gas Prices to Move Ethereum Drop 76% in 12 Days

17/04/2022 by Idelto Editor

Transaction fees on the Ethereum network are dropping again after average fees saw a brief spike on April 5 jumping to $43 per transfer. 12 days later, average ether fees are close to dropping below $10 per transaction and median-sized fees have slid below $4 per transaction. Moreover, layer two (L2) transaction fees have also dropped in recent times as the lowest L2 rate today is $0.03 per transfer.

Average and Median Ethereum Fees Drop

From mid-March up until the first week of April, Ethereum’s average network fees rose from a low of $5.98 per transfer to $43.41 on April 5, 2022. That’s an increase of 625% but after April 5, the average ether gas fee started to drop once again to much lower levels. Today, April 17, 2022, Ethereum’s average network fee to simply send ETH onchain via layer one (L2), is 0.0034 ETH or $10.32 per transfer.

The average network fee is dynamic, not an exact science, and it always changes. It’s also not a hard mandate as the average fee simply represents the average amount of ether users are currently willing to pay to get their ethereum transactions confirmed. The median-sized ethereum transfer fee reflects the fact that network users are paying less than the average to get their ethereum transactions confirmed. On April 17, the median-sized ethereum gas fee is currently 0.0011 ETH or $3.47 per transaction.

Ethereum users paying median-sized network fees are paying 66.37% less than those willing to pay the average gas fee. Similar to the average fee 12 days ago, the median-sized ether fee spiked to $10.31 per transfer on April 5. Again, as mentioned above, the average and median fee is simply the cost to send ether as sending an ERC20 token or swapping a token and interacting with a smart contract will cost a lot more.

Ethereum L2 Fees Slide Lower, Bitcoin Fees 88-90% Lower

Statistics on Sunday indicate that layer two (L2) fees have dropped much lower in recent times as well. Currently, the L2 rollup solution Metis Network is the cheapest on Sunday and will cost $0.03 per transfer. Essentially that means transactions on the Metis Network are 99.70% cheaper than the average onchain transaction fee. In order to swap ERC20 tokens, it will cost $0.16 per transaction using Metis today.

Loopring is the second least expensive L2 rail to use this weekend as it costs $0.05 to send ethereum (ETH). The cost to swap tokens using Loopring is $0.76, at the time of writing. Zksync currently charges $0.05 per transaction as well to send ether and swapping coins will cost around $0.13 per transfer. L2 participants can also leverage Boba Network, Optimism, Polygon Hermez, Aribitrum, and the Aztec Network as well. The optimistic rollup solution Aribitrum One currently costs $0.45 to send ether per transaction and to swap coins it costs $0.62 per transaction.

While onchain fees on Ethereum are lower today, bitcoin (BTC) transfer fees are much lower onchain in comparison. At the time of writing, the cost to send BTC on average is 0.000000084 BTC per byte, which equates to 0.000028 BTC or $1.15 per transaction. The average-sized BTC fee is 88.85% lower than the average ETH fee. Median-sized fees on the Bitcoin network are only 0.0000082 BTC or $0.332 per transfer on Sunday, which is 90.43% cheaper than median-sized fees on Ethereum.

What do you think about the current cost to send ethereum? Let us know what you think about this subject in the comments section below.

Robinhood’s CEO, Elon Musk, and DOGE Co-Founder Billy Markus Discuss Improving Dogecoin

15/04/2022 by Idelto Editor

On Thursday, following Robinhood’s listing of shiba inu, the co-founder and CEO of Robinhood, Vladimir Tenev, spoke about dogecoin being the future currency of the internet on Twitter. Tenev’s Twitter thread got a lot of comments and also received responses from the co-founder of the meme-based crypto, Billy Markus, and Tesla’s Elon Musk.

Robinhood CEO Discusses How Dogecoin ‘Can Be the Future Currency of the Internet and the People’

Elon Musk’s favorite crypto asset dogecoin (DOGE) got some attention on Thursday after the Bulgarian-American entrepreneur and Robinhood CEO, Vladimir Tenev, started a thread on the meme-token subject. The topic started as Twitter was ablaze with commentary concerning Elon Musk’s unsolicited bid to purchase the social media platform. It also follows Robinhood’s recent shiba inu (SHIB) listing and the company adding DOGE.

“Can Doge truly be the future currency of the Internet and the people?” Tenev tweeted on Thursday. “As we added the ability to send/receive DOGE on Robinhood, I’ve been thinking about what that would take. First off, transaction fees have to be vanishingly small. We’re already there. As of last Nov’s 1.14.5 update, typical transaction fees have been ~$0.003 – which you can experience on [Robinhood App] – compared to the 1-3% network fees that major card networks charge,” Tenev added.

The Robinhood CEO further said that the block time should be fast enough to be recorded into the chain in less time than a point-of-sale (POS) transaction. “But it shouldn’t be so fast that miners start building up too many competing chains and waste excessive amounts of energy establishing consensus,” Tenev opined. The Robinhood executive continued:

Doge’s current block time is 1 minute. This is a bit on the long side for payments – a ten second block time would be more appropriate as it would be less than the typical time spent completing a debit card transaction.

Elon Musk: ‘Block Size and Time Should Keep Pace With the Rest of the Internet’

Following Tenev’s Twitter statements, Musk responded after a very active day on Twitter for the Tesla executive. “6 seconds, better said as 6000 milliseconds, which is a long time to computers, is about right,” Musk replied to the Robinhood CEO. Making the conversation a bit more interesting, Dogecoin co-founder and software engineer Billy Markus added his two cents to the discussion with Tenev and Musk.

Markus detailed that eight years ago, he chose one minute blocks because “someone on bitcointalk said 45 seconds on a different chain was causing lots of issues, and 60 seconds was the fastest without having too many issues.” Markus then said:

The faster while still secure, the better IMO — I would guess the infrastructure of the web has improved enough in 8 years to experiment with speeding it up.

Tenev’s Twitter statements follow the recent listing of shiba inu on Robinhood and the CEO has been tweeting about that meme-based crypto asset as well. Musk has been conversing about Dogecoin network improvements for quite some time now (usually on Twitter), and has briefly mentioned a few times last year that the network should scale to the masses. In Tenev’s thread, Musk added a response to Markus’ “faster while still secure, the better” opinion and said: “Exactly, block size & time should keep pace with the rest of the Internet.”

Tenev’s Twitter statements also touched on Dogecoin’s supply mechanics when he explained that DOGE is “inflationary and the supply is infinite, as opposed to Bitcoin’s finite supply of 21M coins.” The Robinhood CEO said:

~5B new Doge are created every year, and the current supply is about 132B. This results in a current inflation rate of

Since Musk started talking about scaling the Dogecoin network last year, the Dogecoin Core development Github repo has seen a lot more action during the last 12 months. In fact, 1000x.group statistics show that between August 2017 and January 2021, Dogecoin network development was stagnant. Active Dogecoin Core network developers in recent times include the programmers Patrick Lodder and Ross Nicoll.

What do you think about the conversation on Twitter with Vladimir Tenev, Billy Markus, and Elon Musk? Let us know what you think about this subject in the comments section below.

Average Ethereum Gas Fee Jumps to $20 per Transfer, L2 Fees Follow Rise

03/04/2022 by Idelto Editor

While Ethereum network fees to transfer data dropped significantly in recent times, tapping a low of $5.98 per transaction in mid-March, gas fees are rising once again on the second-largest cryptocurrency network in terms of market valuation. On Sunday, April 3, the average transaction network fee is around 0.0056 ether or $19.58 per transfer.

Ethereum Network Fees Spike

Last month was one of the best times to cheaply move ethereum (ETH) without it costing a fortune in network fees. On March 12, 2022, Ethereum’s network fees dropped to a low of $5.98 per transaction after reaching a high on January 10, at $52 per transfer.

The transaction fee data highlights that between mid-January to mid-March, ethereum fees decreased by 88.49%. However, since the low 22 days ago, Ethereum (ETH) network fees increased to $19.58 per transfer on average.

At the time of writing, Ethereum’s average network fee is 0.0056 ether per transaction and median-sized ETH fees can cost 0.0021 ETH or $7.47 per transaction. Median-sized fees (MSF) on Ethereum reached a low of $2.39 per transfer on March 11, 2022. On January 10, MSF on Ethereum tapped a high of $29 per transfer.

While both average fees and MSF on Ethereum have risen via layer one (L1), layer two (L2) fees have also increased. Loopring currently offers the lowest L2 fee at $0.15 per transfer. To swap a token via Loopring the cost is $0.87. On Sunday, April 3, the current L1 cost to swap a token is $25.67 per transaction.

Zksync offers common ethereum (ETH) transfers for $0.21 per L2 transfer, while token swap transactions will cost $0.52 per swap. Polygon Hermez is $0.25 to simply move ethereum and Boba Network will charge $0.79 per transfer. Boba Network costs $1.27 to trade an Ethereum-based token.

Arbitrum One L2 fees are currently $0.81 per transfer and the cost to trade tokens via Arbitrum is $1.12. Optimism fees are $1.28 per ETH transfer and it’s currently $1.89 to swap a token via Optimism’s L2 infrastructure. Users can also leverage the Aztec Network which will cost $2.48 per ETH transfer, which is much cheaper than the $7.47 MSF per transaction.

What do you think about Ethereum network fees starting to rise again after last month’s low? Let us know what you think about this subject in the comments section below.