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 Mashinsky, CEO and founder of crypto lender Celsius, 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.
- 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.