Ethereum’s London upgrade is set to activate on Thursday, according to the countdown available on Ethereum.org. “The London upgrade is scheduled to go live on Ethereum in August 2021, on block 12,965,000,” Ethereum.org reads. “It will introduce EIP-1559, which reforms the transaction fee market, along with changes to how gas refunds are handled and the Ice Age schedule.”
Ethereum Improvement Proposal 1559, or EIP-1559, will directly affect how the network handles transaction fees. Going forward, each transaction will burn a base fee, thereby decreasing the asset’s circulating supply, and give users the option of including a tip to help incentivize speedier confirmations proportionate to network demand. The London fork will also introduce other EIPs, such as EIP-3541, according to a blog post from the Ethereum Foundation in mid July.
Twitter user korpi pointed out a number of notable points regarding EIP-1559 in a tweet thread on Monday.
EIP-1559 is scheduled to go live this week and I still see a lot of wrong takes on its impact. Remember:
– It doesn’t make $ETH deflationary by default.
– It doesn’t reduce $ETH supply by 90%, referred as “triple halving”.
– It’s still very bullish for $ETH.
Why?
— korpi (@korpi87) August 2, 2021
“What everyone is excited about is $ETH burn,” korpi said in the tweet thread after discussing a number of other points regarding the Ethereum upgrade. Korpi added:
“After EIP-1559 part of the transaction fee is burned and removed from circulation. But it doesn’t mean that ETH immediately becomes a deflationary asset. For that to happen ETH burned must be higher than ETH issued in block rewards.”
During his keynote at the EthCC conference in Paris, Ethereum co-founder and lead developer Vitalik Buterin implored the Ethereum community to innovate beyond the confines of decentralized finance.
Describing non-financial utilities as “the most interesting part of the vision of general-purpose blockchains,” Buterin lamented that financial applications currently “dominate the Ethereum space.”
“Being defined by DeFi is better than being defined by nothing. But it needs to go further.”
Buterin outlines several non-financial applications for Ethereum, including decentralized social media, identity verification and attestation, and retroactive public goods funding.
“Moving beyond DeFi is not about being against DeFi. I actually think […] the most interesting Ethereum applications are going to combine elements of finance and non-finance,” said Buterin.
“Maybe a few years from now we’ll have a lot of really exciting things […] that are just providing all kind of very diverse and real value to all kinds of people, not just within the Ethereum ecosystem, but also going far beyond it as well,” he added.
Buterin has already begun work on public goods funding. In a July 21 blog post co-authored by Buterin, layer-two scaling solution, Optimism, pledged to fund open source development through a retroactive rewards protocol, with Optimism committing all profits generated through sequencing to the initiative.
Why DeFi?
Buterin attributes the Ethereum community’s preoccupation with DeFi to two main factors.
Firstly, Vitalik asserted that “finance is just the area where centralized technology sucks the most,” concluding that finance offers a larger domain for decentralization than other centralized industries:
“I can send you a centralized email and you will get it within one second. And sure, maybe various intelligence agencies will read it, but at least you could read it and at least you can read it one second from now. International bank wires do not work that way.”
Buterin also emphasized the prevalence of high fees in pushing the sector toward financial applications, noting:
“The degens can pay for it, the apes can pay for it, the orangutans can pay for it. But if we start talking about a decentralized social media, where every tweet becomes an NFT, then that can’t work if you have $5.22 transaction fees.”
However, Buterin offered that the challenge of high transaction fees “is now being solved” by Ethereum’s growing ecosystem of layer-two networks.
Related: Bitcoin falls to sixth for daily revenue, with just 12% of Ethereum’s fees
With work to mitigate transaction costs on Ethereum currently underway, Buterin asserts that now is the time to begin exploring how Ethereum can be used to tackle other issues, stating: “the Ethereum ecosystem has to expand beyond just making tokens that help with trading other tokens.”
“If you just take this narrow thing that is DeFi, and you keep pushing it to infinity […] you’re just gonna get tokens that give you profit from yield farming other currencies that are financial derivatives between other yield farming tokens,” he said.
Despite noting that financial derivatives offer some value to the sector, Buterin warned of the systemic risk associated with complex derivative products, concluding: “Let’s not just do DeFi.”
“These things are valuable up to layer-one and layer-two, […] but once you get to layer-six, you’re actually increasing the financial instability and the risk this whole thing is going to collapse.”
Ethereum appears to be extending its fee dominance over Bitcoin by roughly 10 times, with Bitcoin currently ranking just sixth by weekly fee generation.
According to CryptoFees’ data for July 18, the Bitcoin network had generated $725.7 million in daily fees on average over the past seven days, and less than $400,000 worth of fees for the day.
Ethereum tops the rankings by far, generating more than $6.1 million in daily fees on average for the week, and more than $5 million for the day. As such, Ethereum’s daily fees beat out Bitcoin’s by 8.4 times for the past week, and by more than 15 times for July 18.
Uniswap V3 ranked second with an average of $1.5 million in daily fees, followed by Binance Smart Chain with $1.2 million, Uniswap V2 with $732,000, Aave with $728,000, and then Bitcoin.
Twitter user “odin free” tweeted the findings, likening Ethereum’s network strength relative to Bitcoin to Facebook’s rise to dominance over Myspace during the late 2000s.
BTC fundamentals in absolute free fall.
The 7th crypto is flipping $btc. Fees matter, it shows that people are willing to pay to use $eth, and that gives security.
Becoming clearer that BTC has nothing to do with the thriving web3 ecosystem.
It’s the Facebook/Myspace flip pic.twitter.com/XBDV2qu0er
— odin free (@odin_free) July 19, 2021
Bitcoin’s slide down the fee rankings comes as Ethereum’s forthcoming London upgrades spark renewed speculation whether the leading crypto asset by market cap will be flipped amid the Eth2 rollout.
Related:Ether already ‘flippening’ Bitcoin, says Celsius CEO
On July 14, crypto analyst Lark Davis tweeted data indicating that Ethereum’s daily on-chain settlement value is trending at triple that of Bitcoin. Davis noted the increasing popularity of layer-two scaling solutions for Ethereum is likely to increase the disparity.
“I highly suspect this gap will increase now that we have layer twos like Optimism coming online,” he said.
Ethereum is also beating out Bitcoin by total transaction count by roughly 500%, and has enjoyed brief stints leading BItcoin by transaction volume, trading volume, and node count over recent months.
Amid the ongoing crackdown on cryptocurrency mining in China, mining new Bitcoin (BTC) continues getting easier as BTC has experienced another mining difficulty drop.
On July 18, the Bitcoin network posted its fourth consecutive negative adjustment of mining difficulty, dropping 4.8%, according to data from Bitcoin explorer BTC.com.
The latest mining difficulty adjustment occurred at block 691,488, reducing the difficulty rate from 14.4 trillion to 13.7 trillion, the lowest level recorded since June 2020. The difficulty metrics have now almost halved over the past two months, after reaching over 25 trillion on May 13.
Bitcoin’s five past mining difficulty adjustments. Source: BTC.com
The latest Bitcoin mining adjustment follows a series of consecutive difficulty drops that started with a nearly 16% decline on May 29. Further negative adjustments continued with a 5.3% drop on June 13 and a massive 28% decline on July 3 — the biggest mining difficulty drop on the Bitcoin network.
Related:Bitcoin miner revenue jumps by 50% in 4 days since record difficulty drop
Bitcoin mining difficulty is a measure of how hard it is to mine a BTC block, with a higher difficulty requiring additional computing power to verify transactions and mine new coins. Bitcoin’s mining difficulty adjustment occurs every 2,016 blocks, or about every two weeks, as Bitcoin is programmed to self-adjust in order to maintain a target block time of 10 minutes.
Bitcoin’s continuing mining difficulty decline comes in response to the ongoing miner migration out of China caused by a major crackdown on the cryptocurrency mining by local authorities. The ongoing difficulty drop falls in parallel with declining Bitcoin hashrate as well as decreasing average BTC transaction fees.
The concerns voiced about the consensus mechanisms of Bitcoin (BTC) and Ethereum (ETH) have played a part in the sideways price action both assets have seen over the past two months, opening the door for other competing projects to gain attention.
One project that managed to overcome the sideways action in the market and rally to a new record high on July 10 is Constellation (DAG), a protocol that utilizes a directed acyclic graph architecture to achieve a consensus that is theoretically capable of infinite scaling.
Data from Cointelegraph Markets Pro and TradingView shows that the price of DAG rallied 353% from a low of $0.037 on June 22 to a new record high at $0.17 on July 10.
DAG/USDT 4-hour chart. Source:TradingView
Three reasons for the strong showing from DAG include the release of a functioning decentralized exchange, an expanding list of global partners who utilize the Constellation network to manage data and the network’s ability to offer low-cost, highly scalable transactions.
DeFi launch brings yield to stakers
The recently launched Lattice Exchange (LTX) is an automated market maker-based decentralized exchange (DEX) that utilizes Constellation’s Hypergraph network to offer a “near-zero fee and horizontally scalable decentralized network.”
#YieldFarming is the perfect method for the community to engage directly with @LatticeExchange, allowing users to utilize $LTX while being rewarded.
Read more about liquidity providing and staking in our latest blog post https://t.co/usZLdkbNMS#DEX #DeFi #LatticeExchange
— Lattice Exchange (@LatticeExchange) April 16, 2021
In the path few months, the project has added yield farming for LTX token via liquidity provision on Uniswap or staking the token directly on the Lattice Exchange for a calculated APY of 155%.
DAG holders can also participate in the network by staking tokens on a state channel to help increase the network’s transaction per second (TPS) capability, or by using DAG tokens to run a node on Constellation’s Hypergraph Protocol in order to validate data and transactions and receive rewards paid in DAG.
Notable business partnerships include Amazon Web Services and the United States Airforce and the project has also established sector-related partnerships with Chainlink (LINK) and KuCoin exchange.
The announced partnership with Liechtenstein Cryptoassets Exchange (LCX) was also a significant development for the Constellation ecosystem as the exchange agreed to support the listing of DAG along with future tokens created using the Constellation Network’s L_0 Token Standard.
Faster transactions, lower costs
Recently, Bitcoin and Ethereum have fallen under increased scrutiny for their environmental costs and high transaction fees. This led investors and developers to shift their attention to projects like Solana and layer-2 solutions which offer faster transaction speeds.
Just a few months ago, traders and blockchain projects were crippled by high gas fees on the Ethereum network, and this means that any project that offers secure, low fee transactions with a competitive TPS has the opportunity to thrive.
The new ‘Stargazer’ wallet interfaces with Lattice and it supports zero-fee person-to-person transactions on the network.
DeFi platform comparison. Source: Twitter
As the cryptocurrency community prepares for the upcoming London hard fork on Ethereum, the fate of competing layer-one and layer-two solutions remains up in the air as users wait to see if the upgrade leads to a significant reduction in fees. If the situation doesn’t noticeably improve, strengthening fundamentals and the possibility of filling a growing demand niche could bode well for DAG price in the future.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Elon Musk, the at-times controversial SpaceX founder and stop-and-go crypto supporter, voiced his support late Sunday for a set of major updates to the Dogecoin (DOGE) blockchain. The changes would drastically redesign the cryptocurrency’s software architecture and alter its token economics.
The popular “joke crypto” appears to be gearing up to become a serious utility coin after a massive influx of capitalization earlier this year. It remains to be seen whether the updates Musk supports would be good or bad for the coin’s holders should they be adopted.
In a Reddit thread Sunday, Dogecoin Core developer Patrick Lodder summarized the proposed updates:
“This proposal to all dogecoin stakeholders suggests to reduce average fees 100x for standard transactions on the dogecoin chain, split full control over all aspects of fees between miners and node operators, rely less on core development, and bring back a functional (small) free transaction space that incentivizes keeping the network healthy.”
Lower fees may attract more users looking to use Dogecoin for cash checking, remittances, and merchant payment settlements online. It may also lower the incentive for miners to maintain, validate, update, and secure the Doge blockchain.
Elon Musk told Dogecoin Core developer Ross Nicoll in a tweet Sunday night that these changes are, “Important to support.”
Important to support
— Elon Musk (@elonmusk) June 28, 2021
Charles Hoskinson — who cofounded Ethereum with Vitalik Buterin, and founded competing blockchain Cardano — said in a recent podcast that he’s just glad Musk is stirring the pot for Dogecoin, even when he’s just goofing on it.
Hoskinson said he hopes the attention will prompt “real developers” to come in and “start working on doge to create some use and utility for it, so at least it has a value floor and won’t collapse.”
Dogecoin got a price bump from Elon Musk’s tweet, rising from $0.242 (USD) to as high as $0.266 before settling in under key resistance around the $0.260 level at time of publication.
Musk’s ability to move markets with the tap of the tweet button led a former Bitrefill executive to joke, “Say something, Elon Musk!” last week with the DOGE price down for six consecutive weeks. That was after peaking in May along with the rest of the cryptocurrency market, though Dogecoin outshone most of its competition during the recent (and arguably ongoing) bull run.
The cost of using the Bitcoin and Ethereum blockchains is on the rapid decline, as evidenced by a 93–95% reduction in average transaction fees over the past couple of months.
Fees are paid to the miners who process transactions on a typical proof-of-work blockchain. The size of the fee depends on the size of the transaction in bytes and how many transactions a coin has gone through in the past (as these need to be checked every time a coin is moved). Supply and demand for space also dictate the size of a transaction fee since blockchains have limited capacity.
Both Bitcoin and Ethereum saw their transaction costs surge to all-time highs in 2021, in April and May, respectively, in coincidence with their rising coin valuations and price peaks.
Bitcoin’s average transaction fee hit $62.77 on April 24 — a figure that exceeded the $55 all-time high from December 2017 which stood for more than three years. By June 6, fees had fallen as low as $4.38. That marked a 93% reduction and sent BTC’s average fee back to levels not seen since December 2020, prior to 2021’s market pump.
The same general pattern was witnessed on Ethereum, where average transaction fees rose as high as $69.92 on May 12. That was another all-time high for the cost of using Ethereum and was undoubtedly fuelled in part by the flurry of activity that accompanied the launch of decentralized finance and the UniSwap exchange, which has long been the biggest consumer of resources on Ethereum.
By June 6, Ethereum’s average fees were as low as $3.44 — a figure not seen since the first day of January 2021, amounting to a 95% reduction. Fees on both blockchains tend to jump whenever there is a sudden increase to the coin price, or a new application which increases network usage.
Historical increases to transaction fees. Source: Bitinfocharts.com
As reported previously by Cointelegraph, the transaction count on both Bitcoin and Ethereum is also on the decline. Between January and June, the daily number of Bitcoin transactions fell from around 400,000, to just 175,000. Likewise, the number of daily Ethereum transactions fell from 1.6 million to 1 million between May and June alone, marking a 37.5% drop.
Learning Bitcoin With Charts: How Are Hash Rate, Difficulty And Fees Related?
Date: May 15, 2021
Bitcoin’s difficulty adjustment mechanism is one of its most important aspects, but learning how it works can be a daunting task. This article leverages on-chain data to visualize how this mechanism works and how it relates to hash rate, block intervals, transaction fees, and the mempool. After reading this article, you will have a better understanding of why at certain times using Bitcoin may appear to be relatively slow and expensive, but also how Bitcoin fixes this and why this process is so essential to ensure Bitcoin’s monetary properties.
Bitcoin’s Supply Issuance Schedule
If you have heard of Bitcoin, you have probably heard that its supply is hard capped at 21 million units (BTC), making it a perfectly scarce asset and thus the ultimate “hard money.”
When Bitcoin was created, miners received 50 BTC for each new block as a reward for their work. The software has a built-in rule that after every 210,000 blocks that are mined (approximately every 4 years, if the block interval is 10 minutes), this “block subsidy” is cut in half during an event called “the halving.” During this first “reward era”’ which ended November 28, 2012, 10.5 million BTC were mined — half of its maximum supply. During the second reward era, half of that amount (10.5 million / 2 = 5.25 million) was issued, followed by half of that (5.25 million / 2 = 2.625 million) during the third reward era — and so forth. After 32 halvings, the block subsidy equals the smallest unit in Bitcoin (0.00000001 BTC = 1 sat) and cannot be split after, which means the block subsidy falls away completely after that (believed to be in the year 2140, if block intervals were 10 minutes during its entire existence). The first 14 reward eras of Bitcoin’s issuance schedule are visualized in figure one.
Figure one: The first 14 reward eras of Bitcoin’s supply issuance schedule
Image source
The careful reader will have noticed that in the previous paragraph, we mentioned twice that the actual calendar dates on which these halving events occur depend on the block intervals and that we assumed 10 minutes here. Why is it important that this supply issuance schedule is predictable in regular calendar-times in the first place?
The Importance Of Relatively Stable Block Intervals
Let’s consider what it would look like if Bitcoin didn’t have a built-in difficulty adjustment mechanism, but simply had a fixed mining difficulty.
If that fixed difficulty had been set relatively high, early mining would have been very expensive and blocks would have come in at a very slow pace early on. Clearly, that wouldn’t have been ideal to bootstrap a new network and could have meant that it never succeeded in the first place.
On the other extreme, if the difficulty would have been set relatively low to incentivize early network participants to join, block intervals would have gotten smaller as more miners joined the network, and blocks would have come in at an increasingly quicker pace. It would have quickly run through its entire supply issuance schedule. Had this happened, the Bitcoin network likely wouldn’t have had enough time to develop the block space market needed to sufficiently incentivize miners to keep mining blocks in order to process transactions and secure the network after the block subsidy had run out.
To summarize, relatively stable block intervals are needed to spread out Bitcoin’s supply issuance over time, which in turn is needed to incentivize miners to keep joining the network over a relatively long bootstrapping period, as well as to gradually develop a block space market that will be able to keep the lights on after the block subsidy reward runs out.
To guarantee that block intervals will remain relatively stable over a multi decade period, Bitcoin has a difficulty adjustment mechanism. As can be seen in figure 2, even with this built-in difficulty mechanism, its block intervals were not very stable, averaging much longer than 10 minutes per block during its first year of existence. The block intervals became more stable after Bitcoin set its first market price in July, 2010, and have been relatively stable at just under 10 minutes for over five years now (no structural up or down trends in the orange line in figure 2) – works like a charm.
Figure 2: The 14-day moving average of Bitcoin’s mean block interval over time
Image source
Bitcoin’s Difficulty Adjustment Mechanism
To mine bitcoin, miners use highly specialized computers to basically guess a certain number (slightly simplified explanation). When a miner finds the number that the network is currently looking for, that miner earns the right to create a new block on the Bitcoin blockchain, take its block subsidy, choose which transactions to include in that block, and collect the fees of those transactions. At the time of writing, all miners that are active on the Bitcoin network are estimated to have a total capacity (hash rate) of 170 exahashes per second (EH/s), which is 170,000,000,000,000,000,000 hashes per second.
In Bitcoin’s first year of existence (2009), it was still possible to mine Bitcoin on the Central Processing Unit (CPU; which is basically the central chip in a computer that takes care of lots of things) of an average consumer computer, as the network’s hash rate was just a few million hashes per second. Over time, more computers joined the network and eventually chips that were better at heavy number crunching via their Graphics Processing Unit (GPU), the chip in a computer that is applied for graphical tasks and linear algebra) or even hardware custom made for Bitcoin mining (an ASIC, or Application Specific Integrated Circuit) was used.
As you can imagine, as the network’s hash rate increased by a multi-trillion-fold from that first year until now, it was necessary to make it a lot harder to guess that certain number to ensure relatively stable block intervals of approximately 10 minutes each
In Bitcoin, “difficulty” is the measure for how hard it is to find that number that the network is looking for. Every 2,016 blocks (14 days if block intervals are 10 minutes), the Bitcoin software basically calculates the block intervals during that period and adjusts the difficulty so that at current capacity, the average block interval will be roughly 10 minutes again.
The interplay between Bitcoin’s difficulty (the 14-day moving average of the) hash rate and block intervals over the last three months is visualized in figure 3. During the first visualized difficulty adjustment period (the red column on the left), the hash rate was declining (downtrend in black line). As network capacity decreased, block intervals increased (uptrend in blue line), making it necessary to decrease the difficulty (small drop in orange line after this period).
In three difficulty adjustment periods after (first green column in figure 3), the hashrate was increasing again, blocks came in faster than planned and difficulty adjusted upwards three times. Mid-April, 2021 (right red column), there was a large power outage in China that caused a massive drop in Bitcoin’s hash rate, slowing down blocks a lot and making a huge downwards difficulty adjustment necessary after the period. After this happened (right green column), the power outage itself was solved and the downwards difficulty adjustment made it much easier for miners to create blocks again. As a result, some miners with less efficient hardware and/or more expensive energy could earn a profit mining again, actually overcompensating the previous loss of hash rate, actually sending it to new all-time highs.
Figure 3: Bitcoin’s difficulty adjustments (orange) and a 14-day moving average of the hash rate (black) and block interval (blue)
Image source
This latest hash rate drop and recovery is a good example of why miners leaving the network does not have a cascading effect of more miners leaving the network (sometimes called the “mining death spiral” by critics), but the software simply increases the remaining miners’ profit margins, incentivizing other miners to (re)join the network.
Transaction Fees
A side effect of this mechanism that we all feel is its impact on transaction fees. During times when the hash rate increases and blocks are coming in faster than planned (green columns in figure 4), transactions can relatively easily be included in blocks. Since this means that there are less transactions queued up in line (in Bitcoin called the “mempool”) to be included in upcoming blocks, transaction fees can be relatively low.
The opposite is true during periods where hash rate drops and block intervals increase (red column in figure 4). When blocks are coming in slowly, the queue of transactions waiting to get included gets crowded, and people need to bid up their transaction fees to basically jump the line. As such, transaction fees spike especially when the network capacity decreases (hash rate drops) and is waiting to be bailed out by the next difficulty adjustment.
Figure 4: A 14-day moving average of the Bitcoin hash rate (black), median block interval (blue) and median transaction fees (orange)
Image source
In this section, we discussed the fees of transactions that were included in blocks. For those looking to transact on the Bitcoin network, it is even more relevant to get a feel for how much all of the transactions that are still waiting in line to be included in future blocks are bidding for their needed block space.
Mempool
As briefly mentioned above, the Bitcoin mempool can be interpreted as the total of all transactions which were broadcast on the network but are still waiting in line to be included in a future block. Technically, each of the thousands of Bitcoin nodes on the network has its own mempool, but since they are mostly well interconnected, visualizing them as a single waiting line is alright for general explanatory purposes.
Mempool.space is an industry-standard website that gives anyone not running their own node or simply looking to get a quick look at the mempool all the relevant data. Examples are the total size of the waiting line (mempool size), how many transactions are joining the queue (incoming transactions), if blocks are coming in faster or slower than expected (estimated difficulty adjustment) and estimations of how high the transaction fee of a new transaction needs to be to be included at low, medium, or high priority.
Figure 5 visualizes the mempool of the last three months. As you would expect, the patterns described in figure 4 can also be seen here. Between late February and early April 2021, when the amount of hash rate on the Bitcoin network increased and more blocks than planned were created, the mempool size (the size of the waiting line) decreased and transaction fees decreased correspondingly. After the mid-April hash rate drop, the mempool quickly increased and transaction fees skyrocketed, but both declined quite quickly after the April 30th difficulty adjustment, and subsequent hash rate growth to all-time highs.
Figure 5: The Bitcoin mempool according to mempool.space
Image source
The Future Block Space Market
As briefly mentioned at an earlier point in this article, Bitcoin’s block subsidy is designed to decay over time, and the development of a healthy block space market where transaction fees become the primary source of revenue for miners is essential to incentivize miners to keep processing transactions and securing the network in the long-run.
This is possibly the most important test that awaits Bitcoin in the future, and is the subject of my previous Bitcoin Magazine article titled “An Ode And Forthcoming Obituary To Bitcoin’s Four-year Cycle,” which is a recommended follow-up read. Finally, if you have any questions on the topics discussed in this article, feel free to send me a message on Twitter.
Disclaimer: This article was written for educational and entertainment purposes only and should not be taken as investment advice.
This is a guest post by Dilution-proof. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
Uniswap has surpassed Bitcoin in terms of daily fee generation for two days in a row.
The fee flippening was observed by crypto industry blogger Evan Van Ness citing figures from CryptoFees, a website that compares the daily fees generated by the top blockchain networks.
Uniswap has fully flipped #Bitcoin in fees
Wouldn’t surprise me if market caps were
1) $ETH
2) $UNI
3) $BTC
in the future. pic.twitter.com/iNUe7Jmw9c
— Evan Van Ness (@evan_van_ness) May 11, 2021
Uniswap founder Hayden Adams was quick to post about the milestone:
“Uniswap v2 LP fees finally passed Bitcoin network fees on the 7-day average. Would be even higher if [cryptofees] tracked v3,”
At the time of writing the website was reporting that Uniswap had generated $7.1 million in fees over the past 24 hours compared to Bitcoin’s $4.6 million.
Although a million critics immediately pointed to high gas fees on Uniswap being responsible, Adams pointed out revenue in question was actually swapping fees paid to liquidity providers rather than gas fees. In fact he said gas fees in ETH generated by Uniswap are exponentially higher than Bitcoin’s transaction fees.
This is swapping fees paid to LPs
Not Ethereum network fees paid to Ethereum miners (the high fees people are upset about)
— Hayden Adams (@haydenzadams) May 11, 2021
Uniswap has now flipped Bitcoin for two days in a row for liquidity provider fees according to the sit. The 7-day average for the decentralized exchange is also now higher than Bitcoin’s, with $5.9 million compared to $5.3 million
However Ethereum was streets ahead of both Uniswap and Bitcoin with a daily fee count of close to $90 million due to record high gas costs.
In a separate tweet, Adams stated that Ethereum layer-two scaling is badly needed, stating that today, Uniswap users alone have spent around $42 million on gas fees, adding “this is almost 5X what was spent on Bitcoin network fees during the same period”.
There was a flurry of complaints from Uniswap users when version 3 was rolled out on May 5 as gas fees appeared to be even higher than the previous iteration of the platform. A layer-two version based on Optimism is due to launch soon.
Average gas prices have skyrocketed to a record high of $68 according to Bitinfocharts. Eth Gas Station is reporting that gas costs for more complex operations such as smart contract interactions or DEX token swaps are currently over $200.
Many of the respondents to Adam’s tweet asked when layer-two scaling would be rolled out for Uniswap. YouTuber Lark Davis was among them, stating:
“Great, now implement some layer 2 scaling so that Uniswap is actually usable by non-rich users. Polygon is ready and waiting. Aave, Curve, Sushi, Pool together all on it. Optimism is months away. Why wait?”
However, Optimism may be closer than many realize for whitelisted projects including Uniswap. Another whitelisted DeFi project, Synthetix, has just completed an upgrade to enable Optimism trading, although there’s no confirmation on when it will go live.
pic.twitter.com/qTCoxj3dhk
— SynthaMan | Spartan.eth (@SNXified) May 11, 2021
Crypto data aggregator CoinMetrics has compiled a list of 100 insights into the recent performance of the digital asset markets — and the figures add up to a very bullish picture for the ecosystem.
Released to celebrate the 100th issue of its State of the Network report, the list notes that a $100 investment made into Dogecoin 100 days ago would be worth $2,742 today — outperforming the same $100 investment in Bitcoin (which would be valued at $135 today), Ethereum ($186), and Uniswap ($401).
Price performance of BTC, ETH, UNI, and DOGE over past 100 days: CoinMetrics
The report states that Bitcoin has seen $14.5 billion worth of “trusted trading volume” in 100 days, alongside $6.1 billion worth Ether, $2.4 billion worth of XRP, $2.3 billion worth of DOGE, and $1.3 billion worth of Cardano (ADA) over the same period.
When looking at recently active addresses, veteran networks appear to still be the most popular — with nearly 611,000 active daily Ethereum addresses over the past 100 days, and 1.12 million active Bitcoin wallets. Bitcoin set a new record for daily activity on April 14 with 1.36 million wallets engaging with the network.
Over the past 100 days, a total of 1.4 million addresses have engaged with the top DeFi protocols — Uniswap, Aave, Compound, MakerDAO, and Synthetix — while the Litecoin network has hosted 24.4 million active wallets.
Users are paying to access the Ethereum mainnet at an accelerated pace, with $2.3 billion of the $3.17 billion in total fees that have ever been generated by Ethereum, having been recorded since the start of 2021. By contrast, Bitcoin has generated roughly $2 billion fees over the network’s lifetime.
The average Bitcoin transaction fee was $20.68 over the past 100 days, while Ethereum transactions averaged $16.68 over the same period. Bitcoin’s average transaction size of $30,000 has been almost double Ethereum’s $15,660 since the start of 2021.
Despite Ethereum’s impending transition to Proof-of-Stake, Ethereum hash-rate has grown at 4.5 times the rate of Bitcoin since the start of the year, with Ethereum up 89% while Bitcoin’s hashing power has increased by 20%.
The report also notes the surging popularity of stablecoins, with Tether’s supply on Ethereum increasing from 13.5 billion to 24.4 billion this year— however that was outshone by the amount of USDT on TRON, which grew from 6.8 billion to 26 billion. USDC expanded 234%, from 4.1 billion to 13.7 billion, and circulating DAI was up 192%, from 1.2 billion to 3.5 billion, since the start of the year.
“It took about 2.5 years for stablecoin supply to grow from 1B to 10B. It took less than a year to grow from 10B to over 75B,” CoinMetrics wrote, adding:
Total stablecoin supply is on pace to pass $100 billion before the end of 2021.”
