Ethereum Fees Plummeted 65% in October Following DeFi Volumes Back to Earth
Miners' income from processing transactions on the Ethereum blockchain more than halved in October as the mania for DeFi cooled.
Nov 3, 2020 at 4:18 p.m. UTCUpdated Aug 19, 2021 at 5:28 a.m. UTC
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Miners' income from processing transactions on the Ethereum blockchain more than halved in October as the mania for decentralized finance (DeFi) cooled.
- Ethereum users paid $57.49 million in transaction fees in October – down 65% from September's record monthly tally of $166.39 million, according to data source Glassnode.
- "Transaction costs declined as volumes on decentralized exchanges dropped, reducing demand for network's bandwidth," Alex Melikhov, CEO and founder of Equilibrium & EOSDT stablecoin, told CoinDesk.
- Trading volume on decentralized exchanges fell by nearly 25% to $19.4 billion in October to register the first monthly decline since April. The majority of decentralized exchanges (DEXs) are based on Ethereum.
- Further, the maximum "gas" price – paid by participants to transact on Ethereum – declined from 5.18 million gwei to 0.6 million gwei in October, according to data source Bitquery. (A gwei is a billionth of 1 ether.)
- The sharp drop indicates there was less aggressive bidding by market participants for running transactions on the network, according to Denis Vinokourov, head of research at London-based prime brokerage Bequant.
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- Total fees paid had surged from $22 million to $166 million in Q3, as the DeFi space witnessed explosive growth following the launch of COMP governance token by the lending protocol Compound in June.
- Such was the activity in September that ether miners earned over six times more in fees than bitcoin miners.
- And while ethereum miners earned significantly less from fees in October, they still made more than the bitcoin miners, who collected $41.20 million in fees.
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Correction (Nov. 4, 2020): An earlier version of this article erroneously attributed the quote to Alex Mashinsky from Celsius. This has been corrected.
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