Although Ethereum currently leads the web3 industry in annual fee revenue, the recent drop in gas prices has Tron ready to weaken its dominant position.
According to data from Lookonchain, the Ethereum network has generated $2.73 billion in revenue over the past 12 months, surpassing Bitcoin’s $1.3 billion and Tron’s $459.4 million. In terms of revenue share, Ethereum accounts for 53.5% of the cumulative fees of the top nine blockchains, followed by Bitcoin at 25.5% and Tron at 9%.
However, with Ethereum’s gas fees recently plummeting to multi-year lows, its ranking appears to be poised to slip. According to TokenTerminal’s 30-day annualized data, Ethereum is expected to generate $1.65 billion in annual revenue. This would place Ethereum in second position, just behind Tron, which is projected to accumulate $1.72 billion in fees over the next 12 months.
While Bitcoin’s revenue is expected to reach $1.17 billion over the 12-month period, its bi-weekly annualized fee amount is only $450 million.
Gas fees on Ethereum plummet
According to data from Etherscan, Ethereum’s gas prices have dropped significantly since March, with the average daily gas price falling 88% from 98.7 gwei on March 5th to 11.6 gwei today.
Data from Dune Analytics also shows that on June 29th and June 30th, the average gas price dropped below 3 gwei, the lowest level since 2016.
The decline in gas prices coincides with the activation of Ethereum’s London upgrade, which significantly reduces transaction costs on the second layer by replacing gas-intensive call data with lightweight binary large objects (blobs).
Data from GrowtThePie shows that since the upgrade went live, the cost associated with submitting transactions from the second layer networks to the Ethereum mainnet has decreased by several orders of magnitude. While top L2 networks including Arbitrum, OP Mainnet, ZkSync Era, and Base were paying mainnet fees ranging from $262,000 to $601,000 on March 5th, they are now paying fees in the range of a few hundred dollars to $3,000.
While lower fees make it easier for users to access Ethereum, this trend also threatens Ethereum’s deflationary narrative. According to data from Ultra Sound Money, with the decrease in Ethereum’s transaction fee consumption, Ethereum is now inflating by approximately 50,000 Ether per month.
Increased activity on Tron
In contrast, Tron’s fee revenue has surged as more users utilize the network as a tool for low-cost stablecoin transfers.
A paper published by Brevan Howard in November 2023 showed that over 2.4 million wallets interacted with USDT on Tron on a weekly basis, compared to only 265,000 on Ethereum. In April, data shared by IntoTheBlock revealed that the weekly dollar volume on Tron was twice that of Ethereum, amounting to $110 billion. According to Lookonchain, on June 26th, Tron’s daily dollar volume reached $16.9 billion.
Tether’s data shows that over 53% of its supply ($59 billion) is currently on Tron, surpassing Ethereum’s $50 billion (44%) by price.
Decline in Bitcoin revenue
While Bitcoin announced strong annual fee revenue amid the congestion caused by the rise of NFTs, recent declines in activity have resulted in a drop in fee revenue.
Introduced in January 2023, NFTs launched Ordinals, allowing users to create NFT-like assets by engraving data into Bitcoin satoshis. The protocol also generated BRC-20, enabling users to mint fungible tokens on the Bitcoin blockchain.
NFTs gained popularity in the second and third quarters of 2024, driving Bitcoin’s transaction volume to record highs and fee revenue skyrocketing. The industry saw a resurgence in November, coinciding with increased market activity in Bitcoin ETF speculation, allowing miners to earn substantial revenue until NFT volume declined again in February.
As for April, the launch of Runes briefly pushed Bitcoin’s fee revenue to the second-highest level ever recorded. Runes is a protocol for creating fungible tokens aimed at addressing many of the inefficiencies of BRC-20.
However, according to The Block, initial Rune activity quickly declined, and Runes now account for 24.5% of Bitcoin conversions, down from a high of 77.3% on April 20th.
As a result, Bitcoin’s daily fee revenue has stabilized around $1 million in recent weeks. In contrast, the figure in January ranged from $2 million to $10 million.
