What do users of the Ethereum network mainly pay for?
Editor's Note: This article comes fromChain News ChainNews (ID: chainnewscom), Written by LeftOfCenter, published with permission.
Editor's Note: This article comes from
Chain News ChainNews (ID: chainnewscom)
, Written by LeftOfCenter, published with permission.
Glassnode, an on-chain data analysis service, released a report analyzing the fees generated by different types of transactions in the Ethereum network and found that since its inception, ETH has been used as a pure payment use case less and less. As of May 2020, pure use Online transactions due to payment accounted for 34.2% of the total, compared to the lower transaction fees, which accounted for only 10.7% of the total. This means that the pure transfer of ETH between users is not the main use case of Ethereum.
So what is the main purpose of the Ethereum network? What do users of the Ethereum network mainly pay for? In other words, what are the real organic use cases for Ethereum right now?
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Some core findings:
In the distribution of transaction fee categories, as of 2020, the largest use case that consumes transaction fees is other contract calls (other than ERC20 and ERC721), accounting for about 52.4%, the second largest use case is USDT, accounting for 20%, followed by ERC20 contract calls accounted for 12.6%, while EOA for transferring ETH ranked fourth at 11.5%.
There has been a massive growth in the use cases of stablecoins on Ethereum, driven primarily by USDT. According to the report's analysis, since 2019, the use cases of stablecoins on Ethereum have grown significantly. This development is mainly driven by USDT. Since August 2019, USDT transaction volume has exceeded the transfer volume of ETH, and the difference increasing day by day. ** 79.1% of stablecoin transaction volume on Ethereum is settled in USDT, while the proportion of transaction fees generated in USDT is even more extreme, accounting for 92.8% of the total transaction fees of stablecoins**.
Arbitrage is a real use case that currently exists on the Ethereum network. According to the report analysis released by Flipside Crypto, the growth of USDT transaction volume and transaction fees may be caused by arbitrage behavior, that is to say, arbitrage is a real use case in the current Ethereum network, and these arbitrageurs tend to set higher Gas Fees for greater arbitrage opportunities have resulted in a large amount of transaction fees for USDT.
In other contract categories, the Ponzi scheme MMM BSC topped the list of consumption fees. Glassnode analysis found that among other contract categories other than ERC20 and ERC721, the Ponzi scheme MMM BSC ranked first in consumption costs. The contract generated a large amount of transaction fees from January to May 2019. The project’s wallet Currently holding $4 million of PAX, accounting for 1.6% of the total issued PAX.
From this point of view, the emerging use cases in the Ethereum network are arbitrage and capital trading. These data prove that Ethereum is emerging with real use cases. Although these use cases are not expected to become a payment tool, it is undeniable that these activities are driven by market demand rather than artificial brushing. The value that the encryption industry has always adhered to.
Take arbitrage as an example. On the surface, it is completely different from the use cases we expected and has no contribution to the Ethereum ecosystem. However, in fact, arbitrageurs are actually conducive to deepening market liquidity and promoting price stability.
In the face of these findings, what we need to think about is which of these use cases that are really happening at present are useful and valuable use cases, which ones are not, and how we can solve them after we know these problems.
Since its establishment, the Ethereum network has been used less and less for ETH transfers between external accounts EOA, that is, as a simple payment system, the use case has gradually decreased.
Note: External account EOA: Generally, it is an account belonging to an individual or a user, controlled by a private key without any code associated with it.
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Figure 1 – Percentage of transactions for ETH transfers between external accounts EOA.
Figure 2 – Percentage of fees used for ETH transfers between external accounts EOA.
As of May 2020, more than one-third (34.2%) of network transactions were used to transfer ETH between external accounts EOA, compared to network transaction fees for transferring ETH between external accounts EOA 10.7%.
These numbers suggest that pure ETH transfers between users are not the primary use case for Ethereum.
So what is the main purpose of the Ethereum network? What do users of the Ethereum network mainly pay for? In other words, what are the real organic use cases for Ethereum right now?
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Distribution of Transaction Fees
This analysis will be based on the following different transaction categories:
ETH (EOA) — a transaction that transfers ETH to EOA
0)—A transaction that transfers zero amount of ETH to EOA
USDT—transactions that transfer USDT
ERC20 — a transaction calling an ERC20 contract
ERC721 — Transactions calling ERC721 contracts
Other Contracts — all other contract calls except ERC20 and ERC721
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By 2020, more than half (approximately 52.4%) of the fees will be generated from other contract calls other than ERC20 and ERC721. The second largest use case is USDT, which has increased from almost zero in early 2019 to the current nearly 20%. ERC20 contract calls accounted for 12.6% of fees, and ETH transfers between EOAs accounted for 11.5%.
Followed by: zero amount of ETH transferred to EOA transactions (1.9%), other stable currency transactions (1.4%) and ERC721 contract calls (0.8%).
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Contract fees: DeFi, games, tokens and funds
Since all contract (ERC20 plus other contracts) calls account for 65% of the fees in the Ethereum network, it is worth taking a closer look to understand how these fees are spent.
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It is worth mentioning that,Figure 5 – Non-ERC20 and non-ERC721 contracts generating the most fees in 2020.At the top of the list is the contract of the fund project MMM.
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It is worth mentioning that,
CoinDesk columnist JP Koning has written
pointed out that a significant portion of PAX tokens were used in a suspected Ponzi scheme (MMM Blockchain Smart Contract (MMM BSC)). The wallet of this Ponzi scheme once had a balance of as much as $7.3 million worth of PAX, and now it is around $4 million, accounting for 1.6% of the total issued PAX. Out of the existing 77,500 PAX wallets, 3M BSC's wallet is PAX's No. 1 9 big holders. In addition to large exchanges such as Binance and Huobi and Paxos internal wallets, 3M BSC is Paxo's third largest holding wallet. According to Etherescan data, last month, the PAX standard token contract processed approximately 25,000 transfers per day, of which 5,000 belonged to 3M BSC.
Tokens (POCC, WENI, Tellor).
As shown in Figure 6, among the ERC20 tokens (excluding USDT) that consume the most fees in 2020, WUC, SNX, LCS, LINK and BAT top the list.
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The Rise of Stablecoins Led by USDT
Figure 7 shows the growth of stablecoin transaction volume. As shown in the figure below, since August 2019, the USDT transactions transferred in the Ethereum network per month have exceeded the transfer volume of ETH, and the difference is increasing day by day.
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Figure 7 – Monthly Ethereum on-chain transaction volume.
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Figure 8 – Ratio of ETH on-chain transaction volume [in USD] to all stablecoin transaction volume.
Since mid-2019, USDT has had few competitors: In May 2020, 79.1% of stablecoin transaction volume on Ethereum was settled through USDT, followed by USDC (8.9%), BUSD (5.0%), DAI (3.2%) , PAX (2.6%), HUSD (2.5%), and other stablecoins accounted for less than 1%.
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Figure 9 – Relative distribution of on-chain transaction volume for stablecoins in the Ethereum network.
In terms of Ethereum transaction fees, the dominance of the stablecoin Tether is even more extreme. In May 2020, 92.8% of all fees generated by stablecoin transactions on the Ethereum network were used for USDT transfers, followed by PAX (3.2 %), USDC (2.6%) and DAI (0.8%).
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One possible reason is that the volatility of USDT drives arbitrageurs to set higher gas fees to obtain greater arbitrage opportunities.
Previously, Lianwen reported that Flipside Crypto released a report analyzing the active supply of Tether (USDT) on the Ethereum blockchain and found that most of the ERC20 USDT was used among the three exchanges of Binance, Huobi and Bitfinex. arbitrage speculative purposes.
In actual operation, arbitrageurs will not directly send tokens from one exchange to another, but first withdraw USDT tokens to their own wallets, and then send them to another exchange for arbitrage. The report speculates that this may be due to arbitrageurs wanting to control the speed of transactions. In other words, users can choose to pay a higher gas fee than the exchange's default setting to speed up the transfer, so that they can arbitrage USDT ahead of other traders.
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Zero value ETH transaction
For many years, there has been a non-negligible type of transaction in the Ethereum network that generates fees, namely transactions that send zero ETH to an EOA account.
In fact, when we looked at the average fee for each category, we found that these deals were by far the most expensive.
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Figure 11 – Average Transaction Cost [Unit: USD].
Of course, we can understand that a transaction of zero ETH is usually performed when calling a smart contract, but what is not understood is why someone would initiate a transaction of zero ETH transfer to an external EOA account?
Possible explanations are:
Proof of Address Ownership
miners charity
