Ethereum Fees Surge by 270%, Revenue Hits $8.6M in a Day

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Ethereum Fees Surge by 270% in 7 Days, While ETH Gains 9% – Why?

There has been a notable development in the Ethereum network over the past week. Ethereum fees have surged a whopping 270% between February 5th and 9th. At the same time, the value of ETH in USD increased by over 9%.

Ethereum Maintains its Position

Despite the introduction of several new projects and the development of existing ones in recent years, Ethereum has maintained its position as the leading revenue-generating protocol. According to a study by Crypto Fees, the smart contract network collected $8.6 million in fees in the last 24 hours. This is significantly more than many other projects. For comparison, Uniswap, the largest decentralized exchange, generated only $2 million in fees – a quarter of Ethereum’s.

What Caused the Sharp Increase?

To understand the factors behind the fee increase, Ethereum’s network activity over the past week was examined. The number of transactions on the blockchain showed no significant increase. However, the transfer volume, i.e., the total value of ETH moved on-chain, increased by 159% in the last week. This suggests that the number of high-value transactions has increased in recent days.

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However, it is important to note that the average fee of a transaction is not related to the size of the transferred ETH. Therefore, the only other plausible reason for the increase in fees could be the rise in the market value of ETH. According to CoinMarketCap data, ETH in USD increased by over 9% in the last week. This could have significantly boosted the network’s total revenue.

ETH Burn Rate Increases

As is well known, a certain amount of ETH is burned for each transaction. This corresponds to the minimum amount that is considered valid for a transaction, i.e., the base fee. Over the past week, Ethereum’s base fee has risen sharply, indicating an increase in ETH being removed from circulation. This deflationary pressure could have positive effects on the long-term economic dynamics of the network.

Sources:

Crypto Fees, Santiment, Glassnode, CoinMarketCap

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Last update: 19. February 2024

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