A graph published by Coinmetrics shows how in the latter part of the year, Ethereum fees went on a steep increase, coinciding very closely with the introduction of the Compound's token reward. On Aug. 12, cumulative #2020 Ethereum fees equalized with Bitcoin's, continuing a break-neck increase since then.
Some analyzers have previously reported that in June, Ethereum first started to post higher regular fee revenue. Total sales started to skyrocket as operation soared and the average transaction fee with it. Ethereum started breaking previous records between August and September and soon became unusable for some participants.
The boom of decentralized finance and yield farming is most likely the culprit, while stablecoin transactions and some suspected Ponzi schemes still make up a large portion of the use of block space on Ethereum.
As DeFi euphoria settles, the current state of affairs is likely to wind down somewhat, similar to what happened in #2018 in the crypto market at large.
It is interesting to note that for a few particularly high-activity days in the past few months, Ethereum fee revenue briefly exceeded the block rewards. Overall, since May, fees have slowly crept up to more than 10 percent of overall issuance, a threshold reached just a few times in the history of the coin.
In view of the EIP-1559 initiative, which seeks to incorporate a fee burn system, this could be especially important for ETH holders. Although the details of the implementation suggest that there could still be bidding wars that directly favor miners in periods of high activity , high activity may substantially reduce the effective issuance rate.
For Bitcoin, it is important for its long-term survival to increase transaction fees to cover current issuances, as block rewards will inevitably expire. The cryptocurrency space, however, has started to trend away from Bitcoin-centered use cases to stablecoins and DeFi in the past two years. While the use of Bitcoin remains high, losing dominance over other blockchains may be disastrous for its long-term prospects.