Victor Ugochukwu · Dec 14, 2020 . 5min read
Ethereum Transaction Fees Surpass Block Miners Reward
On average, every transaction on Ethereum network costs nearly $3. This approaches the 2018 highs when the ICO mania reached its peak.
By Victor Ugochukwu · Aug 13, 2020 . 6min read
August 12 is another historic day for Ethereum not because Eth 2.0 has finally landed, but for the fact that transaction fees for the first time surpass block miners rewards on the network.
According to data from Etherscan, network miners produced 6,507 blocks earning 30,793ETH on August 12.
Again, if you decide to go a little further to see why average Ethereum transaction fees surpass block miners rewards, another interesting information emerges.
According to data from Coinmetrics, an on-chain analytics firm, miners earned 17,000ETH, while regular block rewards were 13,500ETH
While miners are smiling to the bank with record gains, network users are bearing the brunts. On average, every transaction on Ethereum network costs nearly $3. This approached the 2018 highs when the ICO mania reached its peak. At that time, per transaction fees peaked at $2.92.
Also, the spike in transactions has continued unabated since April as the graph clearly shows. Many within the community continue to complain about this and how it hinders crypto adoption. Of course, a Redditor raised this concern in the Ethereum subreddit, advocating for a possible lowering of miners block rewards. As well, the Redditor also supports reducing the inflation rate on the network.
However, not everyone supports his proposal. Emphatically, another Redditor thinks its good for the miners. He believes they have suffered in the past with harsh conditions in terms of revenue. “I don’t really see why it’s a bad thing that miners are making a bit of money for once,” he says.
EIP-1559 should help lower Ethereum transaction fees which have now surpass block rewards
In fact, some think it would even make more sense if the block size is increased on the network. But of course, many still kick against this as it doesn’t technically mean reducing transaction costs in any way. It would only mean fees would cost half as much but would still be twice as many of them.
However, while mining will no longer exist in Ethereum with Eth 2.0 launch, the EIP-1559 proposal by Buterin, Conner etc. seeks to solve this exact problem presently.
Basically, EIP-1559 is a transaction pricing mechanism that includes fixed-per-block network fee that is burned and dynamically expands/contracts block sizes to deal with transient congestion.
Whether it fully be implemented before Eth 2.0 final launch is still not apparent. However, with the recent EIP -1559 community funding the proposal received and Vitalik’s enthusiasm about the events surrounding the community funding success, perhaps issues like transaction fees spike might be finally laid to rest on Eth 1.0.