Multiple factors drive ETH transaction fees to soar, Ethereum miners earn more than Bitcoin miners

According to Bitcoinist on June 8, Ethereum transaction fees continue to soar as user demand for smart contracts and ETH transfers surges.

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On June 6, the total transaction fees earned by Ethereum miners exceeded the revenue earned by Bitcoin miners for the first time in months. Blockchain data analysis startup Glassnode published this observation on June 7 and shared the chart below.

ETH and BTC network fee trend chart | Source: Glassnode

“On June 6, Ethereum daily network fees surpassed Bitcoin daily network fees. They were $498,000 vs. $308,000. So far, this has only happened 141 days (8%).”

Glassnode cites the following data:

Ethereum transaction fees are high for several reasons: 1) As cryptocurrency volatility increases, demand for sending ETH between exchanges increases; 2) Ethereum-based Ponzi schemes are becoming popular again; and 3) stablecoins continue to be widely adopted by cryptocurrency traders.

Analysts say this trend of rapidly growing transaction fees will have a significant impact on Ethereum, both positive and negative.

Analysts are bullish on ETH

Analysts say the growing usage of the Ethereum network is a positive factor driving ETH prices higher.

Ryan Sean Adams, founder of Mythos Capital, recently pointed out that his analysis found that the price of ETH is closely correlated with the transaction fees paid by Ethereum users over the past four years.

Adams’ chart shows that if this relationship holds, ETH could be poised to rise by dozens of percentage points.

Expansion solutions coming soon

Although on the surface users are bullish on Ethereum and the price of ETH, the high fees do present a very significant disadvantage.

According to Bitcoinist, if a user wants to interact with decentralized finance contracts such as MakerDAO and Uniswap, a transaction can cost up to $1. In some cases, especially if you want the transaction to be processed quickly, the transaction fee can be as high as several dollars.

This means that if a user tries to trade or spend a small amount of ETH on a DeFi contract, he will spend a considerable portion of his position on fees. Therefore, scaling solutions are urgently needed.

As Bitcoinist previously reported, decentralized exchange 1inch.exchange proposed that Ethereum miners increase the block limit to allow blocks with an interval of 14 seconds to accommodate more transactions.

Currently, the upper limit of Gas on Ethereum is 10 million, but in order to accommodate more transactions, this limit may be increased by several dozen percentage points.

In addition, some second-layer scaling solutions have also begun to become the focus of discussion. These solutions are expected to help Ethereum achieve low-cost, instant and secure payments like Bitcoin's Lightning Network.