The transaction fee on the Ethereum network is down by 82% as the excitement surrounding Decentralised Finance (DeFi) declines in recent weeks
The transaction fees on the Ethereum network were at a high a few weeks ago, thanks to the hype surrounding DeFi tokens in the cryptocurrency sector. However, as the hype calmed in recent weeks, transaction fees on the Ethereum network have dropped by 82%.
According to data obtained from Glassnode, the average transaction cost on the Ethereum blockchain has dropped from $11.61 on September 2 to $2.09 as of October 4. This represents an 82% decline in transaction fees, and could be due to the declining hype around DeFi protocols.
The resulting decline in transaction fees has seen Ethereum miners earn less from fees over the past three weeks. On September 17, Ethereum miners earned 42,763 ETH ($14.97 million) in transaction fees on the network. However, earnings declined to 5,898 ETH ($2.06 million) as of October 4.
In addition to transaction fees declining, the total number of transactions on the Ethereum network has also declined in recent weeks. On October 4, the total number of transactions on the Ethereum network was 935,000, representing a 30% decline from the 2020 high of 1.32 million recorded three weeks ago.
In terms of miners’ total revenue, transaction fees accounted for 69% of total earnings a few weeks ago. However, miners now earn only 29% of their income from fees over the past few weeks. The DeFi boom last month saw miners earn around $500,000 in just one hour on September 1. This is the highest miners have ever earned on the Ethereum network in an hour.
Last week, the receding hype around DeFi had led to massive price drops in the tokens, with some the coins seeing over 93% decline in their trading price. The decline in DeFi protocol prices affected miners’ earnings as they now earn less from transaction fees on the network.
In August, Glassnode reported that Ethereum network miners recorded $113 million in profit. The massive profit generated in August was 3,660% higher than the $3 million they earned in April. At the moment, the $2.09 transaction fees paid on the Ethereum network is still significantly higher than the $0.09 recorded in April.
Despite the decline in transaction fees, over $1 billion worth of Bitcoin is locked in DeFi. The tokenization of Bitcoin on the Ethereum network has increased massively since the start of the year. There are now over 100,000 synthetic bitcoins on the Ethereum network.