Uniswap Generating More Network Fees than Bitcoin; Total Fees on ETH Reaches BTC All Time High

Bitcoin has been the leader in generating more fees than any other network. But that has only been up until June 2020, when decentralized finance (DeFi) mania started kicking in.

Today, this DeFi craze even saw popular DEX Uniswap beating Bitcoin in daily fees of $2.3 million, as per Cryptofees.Info. While BTC only had $1.8 million, Ethereum is unreachable by collecting $8.8 million in fees.

Uniswap, which accounts for 48.5% of DEX volume market share, even without the liquidity incentives, saw $12.7b in traded volume, $36.543 million in fees, and liquidity increased to $3.6 billion over the past 15 days, as per IntoTheBlock.

Another DEX SushiSwap had just under $1 million in daily fees, followed by Synthetix and Balancer, but they only had about $100k to $200k.

In the past week, Ethereum did more than 3x of Bitcoin’s 7-day average fees of just over $3 million, while Uniswap recorded $2.4 million.

“It’s the first DeFi protocol, but not the last. The key feature here is that fees in DeFi benefit not only miners but also LPs and token holders,” noted Santiago R Santos, a partner at ParaFi capital.

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Ethereum entered the space in 2015, and its daily total fees in USD surpassed Bitcoin’s several times since then. But it wasn’t until DeFi exploded that ETH was able to beat the world’s largest network by a wild margin.

During the peak of the 2017 bill market, Bitcoin did nearly $21.4 million in total fees, while at its peak, Ethereum did only $4.55 million.

But earlier in June 2020, compared to Bitcoin’s $383k in total fees, Ethereum recorded a whopping $3.55 million. From here, as DeFi gained more traction, so did Ethereum fees, and this gap between BTC and ETH fees continued to grow.

At the peak of DeFi mania in Sept. 2020, the Ethereum network was used so much that it became unusable as the average fees and gas prices continued to hit new highs. On Sept. 1st, the Ethereum network received more than $17 million in total fees compared to $1.48 million on Bitcoin.

Bitcoin overtook Ethereum for a brief period, a fortnight and a small margin, from late October to early November.

Since then, Ethereum continues to generate millions of dollars in fees every day, setting yet another new record at $21.38 million on Jan. 11, the day the crypto market saw a sell-off.

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Author: AnTy

Even Billionaires Complain About the High DeFi Uniswap Fees; Aave Users Get Excited

Even Billionaires Complain About the High DeFi Uniswap Fees; Aave Users Get Excited

“Defi has incredible potential,” says Mark Cuban but cautions that much like derivatives, “risk never leaves the system” here as well.

Ethereum is notorious for its extremely high fees when the network activity amps up.

In January, with ETH and DeFi tokens enjoying an uptrend and offering buy the dip opportunities, too much activity is making the platform costly to use. Popular DEX Uniswap, which has long been the biggest gas guzzler, has spent $28.3 million in gas in the last 30 days.

“The high gas costs are a direct result of *huge demand for trading on Uniswap,” said Hayden Adams, the creator of Uniswap, earlier this month when the fees skyrocketed yet again.

“Scaling is a huge problem. It absolutely sucks small transactions are sometimes priced out during volatility.”

But it looks like it’s not only the smaller users that are feeling the brunt of the hefty fees; even the billionaires are complaining. This billionaire, is none other than crypto skeptic Mark Cuban.

Cuban mentioned that gas was always an issue when Haralabos Voulgaris, Head of Quantitative Research at Dallas Mavericks, suggested there being real value in sending money over a decentralized, permissionless network. Cuban feels,

“Except the gas is always an issue. Just the cost of moving crypto to AAVE is crazy expensive, and the number of non crypto options will increase.”

With the Shark Tank investor who finds more worth in bananas and compares crypto trading with the dotcom bubble,  name dropping popular DeFi project, AAVE got the CT excited AAVE 10.31% Aave / USD AAVEUSD $ 140.95
$14.5310.31%
Volume 509.28 m Change $14.53 Open $140.95 Circulating 12.2 m Market Cap 1.72 b
8 s Even Billionaires Complain About the High DeFi Uniswap Fees; Aave Users Get Excited 1 d A ‘Massive Transfer of Wealth Among Traders’ Sees DeFi Tokens Winning the Round 1 w Three Arrows Capital Holds 36,969 Bitcoin ($1.24B) via An Over 6% Stake in GBTC
.

“One of the most high-profile billionaires trying out DeFi. I am liking this trend,” noted one such DeFi investor.

However, just because Cuban publicly doesn’t find worth in crypto doesn’t mean he isn’t trying things out, as he responded,

“I don’t think people realize I try to test and use all this stuff and have for years. I still have crypto from the early days of coinbase. I’ve never sold anything.”

As for decentralized finance itself, Cuban says, “DeFi has incredible potential.” Still, according to him, much like derivatives, “risk never leaves the system” as it faces the risk of a dominoes-like collapse. Cuban said on the prospect of Defi fixing the problem of underbanked,

“It’s a long way off for the unbanked. Most deal with cash or lack compute power so they need intermediaries. That’s costly. As DeFi grows away from overcollaterization, it will be interesting to see if access expands or contracts.”

But here, the CT takes over and points out that while “the system is only as strong as its weakest link.” We do, in fact, need better insurance models; the missing point is “unlike tradFi, DeFi is a perfectly transparent system that allows you to measure risk in real time,” said Santiago R Santos, a partner at Parafi Capital.

The DeFi space has grown to over $20 billion in total value locked (TVL) as the DeFi project continues to grow and rise in value. This week, the top US banking regulator actually talked about the opportunities of DeFi and regulators needing to be ready for it.

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Author: AnTy

What’s Happening on the Bitcoin Network Amidst The Red Hot Market?

Miners are reaping the fruits of rising BTC price and fees as blockchain activity continues to ramp up.

Bitcoin continues to smash new record highs, the latest one being $35k and nearly $36k. But this has just started and we have a long way to go.

This ATH came after the market had a 20% pullback on Monday providing a ‘buy the dip’ opportunity. “A large pullback of 20% – 30% should be expected, even in a bull market,” noted Arcane Research.

And this drop has been the result of sky-high funding rates and of course an overly confident market that led to $1.2b worth of longs getting liquidated in the BTC futures market — by far the largest daily liquidation since BTC started moving a few months ago.

After normalizing, these funding rates have started rising back up already.

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What’s just as interesting is the activity the largest crypto network has been seeing.

This price action has actually been on the back of the strong volume. Leading spot exchanges crushed all the previous records by having three days with over $10 billion in volume.

“$80+ billion in trading volume in the last 24 hrs on Binance. ATH x 2!” resulting in scaling issues, noted the CEO of leading spot exchange, Changpeng Zhao.

In terms of blockchain activity, Bitcoin active addresses grew by 9.3% week-over-week to start 2021, averaging over 1.1 million per day. These addresses are actually near all-time highs.

On January 3rd, the 7-day average reached 1.15 million, just shy of the all-time high of 1.18 million set in December 2017. The number of hourly active addresses (24h MA) actually just hit a new ATH.

Network security continues to look strong as well with the hash rate growing by 11.7%, again reaching for a new all-time high.

Bitcoin miners are currently enjoying revenue of $33 million per day, as per data source Glassnode. This has been thanks to the rising BTC prices and the average Bitcoin fees that have yet again surged to $11, moving up since Dec. 13.

Between the last halving and October, the average daily revenue was at around $10 million. It has only been within 5 weeks in late 2017 that this number has been higher.

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Author: AnTy

Bitcoin Miners Busy Accumulating BTC; Revenue from Fees Surges 2300% This Year

Bitcoin Miners Busy Accumulating BTC; Revenue from Fees Surges 2300% This Year

BTC miner outflow is nowhere near the previous tops, it is actually even below the 2019 local top.

2020 has been a good year for miners given that their revenue from fees increased from $0.1 million at the beginning of the year to $1.7 million as of Dec. 20th.

The daily miner revenue increased by 31% over the past week, as miners raked in more revenue through fees amidst the strong week for bitcoin price and activity levels.

The rising prices of the digital asset pushed the average fees on the bitcoin network to past $12, a jump of more than 4,185% from the average fee of a mere 2 cents in January 2020.

Miners are also not cashing out their BTC at these prices as seen in the amount of miner unspent supply, BTC that has never left the miner address, which has been increasing since the last halving and currently stands at 1.7 million BTC. Glassnode noted,

“Despite the recent rally, Bitcoin miners are not spending more BTC than usual. The Miner Outflow Multiple, which shows when BTC miner outflow is high with respect to its historical average, is far from previous tops and even below the 2019 local top.”

BTC Miner Outflow

Source: Glassnode

Bitcoin miners’ monthly revenue has been surging since September. In the month of November, they recorded $521.69 million in both subsidy and fees, last seen in September 2019. So far, this month $443.65 million have been raked in by them in revenue.

Ever since Bitcoin halving in May, which cut down the miners’ reward in half, fees have been accounting for 8% to 12% of miners’ total revenue, up from 1% at the beginning of this year.

Interestingly, while the price of Bitcoin is currently ranging from $22k and $24k, the stocks of publicly listed BTC mining companies have been up.

In the last 24 hours, Riot Blockchain shares are up 32%, Marathon Patent Group 21.5%, and Bit Digital’s 3.8%.

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Author: AnTy

LVL Crypto Exchange Eliminates Trading Fees to Compete Against US Rivals Coinbase & Gemini

An upstart cryptocurrency exchange dubbed ‘LVL’ that seeks to eliminate trading fees announced yesterday that it will be a free-to-use service for the U.S market. This venture is backed by prominent figures, including Anthony Pompliano of Morgan Creek Digital and Bitcoin advocates Willy Woo and Jimmy Song.

Previously, LVL was limited to premium users only but now wants to compete against Gemini and Coinbase. According to the blog post, current exchanges charge exorbitant fees through direct or hidden costs. LVL, which is pronounced ‘level,’ plans to level the playing field with its new model. The blog reads,

“The truth is that exchange fees are robbing people blind. As we stated in Part 1 of our series on fees, fees can be direct or hidden and affect all traders, big or small.”

The LVL Exchange Model

As highlighted earlier, this crypto exchange deviates from the norm by eliminating trading fees within its platform. This means that users can save up to 10% in fees that would have been charged by some of the existing players. LVL users have exposure to three crypto assets, which are Bitcoin, Ethereum, and Litecoin, with trading limits capped at $300,000 per day.

As for the on-ramping process, LVL allows users to invest their paychecks via direct deposit to secure positions in one of the featured cryptocurrencies. They have also partnered with MasterCard to facilitate direct BTC spending in merchant outlets across North America. Users can opt for a standard debit card or a metal one that features three months of LVL’s premium products.

Notably, the LVL digital wallets are multi-sig by design, while the FDIC insures their fiat accounts to protect consumers with the blessings of the powers that be. LVL CEO, Chris Slaughter, emphasized the importance of these fundamentals as a cutting edge,

“We are a super scrappy business contender by nature … Like, we only have seven people, but we have the first Mastercard approval in North America. We’re registered with FinCEN. And not only do we have bank accounts, but they are also full checking accounts.”

LVL’s Income Model

Like any going concern, LVL plans to remain sustainable by making some revenue in other areas. The platform charges a withdrawal fee of 3% compared to a 1-5% range by the dominant exchanges in the U.S. Same-day bank transfers incur a 5% fee, although this is a plus given that regular transactions can take up to 5 days.

LVL also runs a premium service at $9 per month; this subscription features utilities such as top-tier private banking service for BTC, automated trading strategies, and a reduction of 33% of the network fees during withdrawals. Slaughter is optimistic that the platform will surpass Coinbase’s liquidity within January 2021.

“Based on our current number of pro users, and the way we expect liquidity to grow following this announcement, we expect to pass Coinbase’s liquidity within the 2% band in January.”

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Author: Edwin Munyui

Cream Finance Announces AMM, creamY, with Several Innovations that ‘Make it Stand Out’

Cream Finance has introduced an automated market maker (AMM) which focuses on low slippage and fees of stablecoins.

Combining Curve’s very low cost and very high-efficiency feature and Balancer’s updatable for addition or removal of an asset from the pool — unlike Uniswap or Curve pool, which are immutable — creamY has created a “dynamically updateable AMM which consolidates liquidity.”

Besides being dynamic and capital-efficient, this AMM allows users to hold or transact with yielding and provide liquidity using one token.

According to yEarn Finance’s Andre Cronje, who partook in the discussion of the project, the design of creamY. it “can alleviate a lot of the current liquidity pain-points.”

Coming up with innovations such as consolidated liquidity, a mixture of a shared order book, a governed liquidity pool, and allowing single-sided liquidity is what makes it “stand out,” said Cronje.

Right from the launch, It will support exchanges for stablecoins, BTC, and ETH.

It will be supporting cryUSD including USDT, USDC, TUSD, BUSD, yCRV, yyCRV, yUSDT, yUSDC, yTUSD, cUSDT, cUSDC, crUSDT, crUSDC, and crBUSD; cryBTC covering wBTC/renBTC/tBTC/crRENBTC/cWBTC/ycrvRenWSBTC, and cryETH inclusive of WETH/yETH/crETH/cETH.

Although the code of the protocol has been reviewed by several developers and is currently in the final stages of it, like all the DeFi projects, it hasn’t been through production testing yet.

According to the official announcement, creamY will launch with “strong incentive rewards” in CREAM tokens form, which will be escrowed until the end of the LP period.

For now, the CREAM token of the lending protocol with a TVL of $241 million, is trading at $118, up 2.63% since Sunday in line with the broad market.

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Author: AnTy

Ethereum Is Making it Hard for Retail Investors to Enjoy the DeFi Craze

  • Ethereum fees have calmed somewhat since going haywire.

Average Ether transaction fees skyrocketed to $7.3 on August 13, as per Ycharts. The total daily transaction fees on the network topped at $6.87 million, eclipsing the previous all-time high of $4.55 million in January 2018. The next day, this record was broken to hit $8.61 million.

These astronomically high fees were the result of YAM mania. The distribution of YAM tokens through staking pools, the higher the stakes, the more the tokens earned, created a rush as reflected in the more than $15k worth of transaction fees generated by YAM staking pool smart contracts within hours of launch.

As we reported, a bug in rebase function disturbed the whole set up and required 35k YAM to fix the issue. Again this rush to move YAM caused fees to skyrocket.

ETH Hourly Fees, USD
Source: CoinMetrics

Such speculations, reminiscent of 2017’s ICO mania, lead to “unexpected risk and sudden surges in fees.”

While this means high demand for usage, high fees also cause network congestion and price out certain users. Coin Metrics noted,

“High fees make it less and less profitable for retail investors to put relatively small amounts into DeFi applications. DeFi is increasingly a game for whales, unless there are solutions to help drive fees down.”

In its latest report, Coin Metrics points out how it is becoming “harder for average, retail users to compete with large, whale investors who can afford to pay high transaction fees,” on Ethereum.

When mining a block, Ethereum miners select which transactions to include which are typically sorted by the highest fee as such “relatively low fees get deprioritized and included in later blocks once there’s space.”

Increasing the gas, a unit to measure Ethereum fees, increases the chances of a transaction getting included. And higher fees lead to higher revenue for miners.

As such, as average transaction fees in Ethereum increases, certain types of users and applications, especially those with microtransactions, get priced out, making it skewed towards whales at the expense of small, retail users.

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Author: AnTy

Flash Crash Caused Serious Network Congestion for ETH, ETC, And ERC 20 Tokens on Coinbase

On August 1, the Ethereum’s blockchain faced a spike in network transaction fees, causing a backlog in transfers across several exchanges. Coinbase and Binance, two of the largest cryptocurrency exchanges, saw hundreds of transactions jammed, leading to trading delays. In a blog post by Coinbase, during the fees peak, at 11 pm PST, a total of 559 transactions, deposits, and withdrawals were delayed.

The post reads:

“Starting at 9:45 pm PST, 559 transactions were delayed. The backlog of transactions started clearing 15 minutes after the peak of the fee spike and was fully processed in 110 minutes.”

Coinbase ETH Fees
Source: Coinbase

What Caused the Network Clog?

On the Ethereum blockchain, all transactions are charged a fee that is paid to miners that verify and confirm transactions. This network fee is determined by the variable demand for fixed processing capacity whereby when there is a significant demand, fees will rise and fall when demand is low.

The clog started at about 9.45 pm PST, causing a delay across the ETH and ERC20 tokens with the average delay spiking at 11:30 pm PST at 105 minutes.

Trading remained stable through the clogging moment, with only deposits and withdrawals affected. As of now, Ethereum Classic remains in the status of ‘degraded performance’ on Coinbase.

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Author: Lujan Odera

Most Expensive Crypto Exchanges for Smaller Traders

While stock brokerages have reduced trading fees and various retail brokers like Robinhood offer zero commission trades, digital currency exchanges have increased fees for their lowest tier retail group since a year ago.

US-based cryptocurrency exchange Coinbase who is looking to IPO as soon as this year while being under controversy for selling its blockchain analytics software to the government agencies is one of the most popular exchanges despite having the highest fee level for new customers.

Trading Fees
Source: Arcane Research

In complete contrast, leading spot exchange Binance charges new customers 80% lower fees than Coinbase and Bitstamp.

When it comes to volume, Coinbase maintains the largest volume of a US-domiciled digital currency exchange. While it’s the largest in the US, Asian exchanges like Binance transact in higher volumes.

Source: TradeBlock

Coinbase has about 45% of the total market share amongst the largest US accessible exchanges. It recorded $3 billion in notional volume for the most recent full month which is below its second-best month in March at $6 billion and more than $8 billion recorded in January 2018, as per TradeBlock.

There are two types of fees, maker and taker fees. The maker is the one who places orders and provides liquidity to the order book and the taker initiates market orders and consumes booked liquidity.

Coinbase fees are in the middle to higher fee bracket of US exchanges at 50 bps on both the maker/taker side for the lowest tier.

The taker fees for traders trading less than $10,000 a month are 5x higher on Coinbase Pro and Bitstamp than on Binance. “A trader with a $9,500 monthly trading volume would save $456 a year by switching from Coinbase Pro or Bitstamp to Binance,” states Arcane Research in its report.

While most exchanges have either kept the fees unchanged or reduced them over the past year, Coinbase and Bitstamp have doubled both their taker and maker fees making them the “most expensive exchanges for smaller traders.”

In the short run, they may result in “traders staying with Coinbase and Bitstamp, despite the price increase, and drive revenue for the companies,” over the longer term, “there is a reputational risk, especially for Coinbase that has been getting a lot of heat for other activities lately.”

Trading Fees
Source: Arcane Research

The pattern in the market is the higher the volume the lower the fees.

Out of the three largest fiat spot exchanges, Kraken offers the lowest taker fees for small traders and the least favorable taker fees for large traders.

While Binance US and BitFlyer offer the lowest initial taker fees among fiat-supported exchanges at 0.1% and 0.12%, both carry a larger additional bid/ask spread than some of the competitors. As for those without fiat-pairs, Binance and Poloniex hold some of the lowest initial fees at 0.125% and 0.1%.

“Arriving late to the party, Binance US seeks to win market shares through competitive pricing.”

As for maker fees, ItBit is the only exchange that offers negative maker fees, essentially paying customers to place trades and fill up the order book.

Besides trading business, Coinbase also has a custody business and offers staking services, both of which “will see continued growth over the next few years.”

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Author: AnTy

P2P ‘Ponzi Scheme’ Exchange, Good Crypto, Is Behind the $5M Transaction Fees on Ethereum

Fees paid to miners of the Ethereum network has been gaining a lot of traction lately. In 2020, it has been on an upward trend.

The total fee volume in Ether on the network increased by a whopping 336% in the past two months as mean fee volume surged from 0.00067 ETH on April 17th to 0.0027 ETH on June 15th, a spike of 300%.

However, the highlight of this fee trend was when a single transaction spent $2.5 million in fees to transfer 0.55 ETH on June 10th — the highest value ever.

The next day, a second incident was reported of another Ethereum transaction with enormous fees. This transaction was also broadcast by the same addresses and had an identical fee of 10,668 ETH.

While the first transaction was mined by SparkPool, the second one was mined by Ethermine.

Fees is Already Distributed

Ethermine has already distributed the transaction fee to the miners of its pool, after no contact from the sender for four days. The distribution was reportedly based on a miner hashrate snapshot taken at the time block 10241999.

They further clarified that in the future they will no longer interfere in the payout of large fees and will always distribute the full block reward.

Sparkpool made the same decisions and distributed the proceeds today to the miners that submitted hash to SparkPool on that day.

Today, Ethermine also announced that to prevent transactions with very high fees, the Geth team has introduced a new safety feature that will block sending txs with a fee of more than 1 ETH. This will only affect txs sent via RPC while “txs received via p2p are relayed normally.”

But who exactly was behind these massive fees?

Today, PeckShield, a blockchain security company updated that it was a small South Korean peer-to-peer cryptocurrency exchange called Good Cycle, which “appears to be a Ponzi Scheme project.”

PeckShield said the exchange is also lacking in security — the Good Cycle website uses HTTP protocol instead of HTTPS.

Good Cycle has sent the transaction to SparkPool and Etheremine with a message “I am the sender” but the time to distribute the fees to miners by the pool has already lapsed.

The exchange has also suffered “repeated” hacks. Last week, Ethereum co-founder Vitalik Buterin had shared his theory of a hacker being behind this million-dollar tx fees which may actually be blackmail. He said,

“The theory: hackers captured partial access to exchange key; they can’t withdraw but can send no-effect txs with any gasprice. So they threaten to “burn” all funds via txfees unless compensated.”

But this theory was refuted by ZenGo, a keyless crypto wallet provider which said if it would have been blackmail, the service would “defensively halt all operations immediately when they received the ransom demand” but it continued.

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Author: AnTy