Solana Widens Lead Over Ethereum in Transaction Fees

It’s no surprise that Solana flipped Ethereum in terms of transaction fees collected towards the end of last year, and is now well ahead of it. But not nearly so far ahead as Tron.

If you look at the five largest Layer 1 blockchains for the full year 2024, Ethereum is well ahead, with $2.4 billion in gas fees collected, according to a CoinGecko report. Tron is No. 2 at $2.15 billion, followed by Bitcoin at $922 million, Solana at $750 million and BNB Chain at $194 million.

Looking at this year to date it’s a far different picture. Tron is easily on top, with $214.4 million in fees collected, while Solana is well ahead of Ethereum, at $181.5 million and $128.2 million, respectively. Bitcoin is far below at $16.1 million, on track to make just $255.5 million over 2025. BNB Chain is at just $12 million, on track to make $185.7 million if the current fees hold.

Ehereum Plummets

What’s been happening at Ethereum begins with the March Dencun upgrade, which pushed down fees.

Dencun introduced “blobs,” a type of temporary storage for off-chain transaction data that lasts only 18 days. Removing the need to store all that data on the mainnet steeply reduced the cost of running Layer 2s.

Nearly half of Ethereum’s total 2024 transaction fees came in the first quarter, according to the CoinGecko report cited above.

Since then, “Ethereum’s drop to third place is generally due to two reasons: Primarily the network being forced to be governed by solid sustainable fees as the post-Merge currency model — which puts a premium on cost discipline over fee,” Nick Cowan, Group CEO at VLRM Capital Management, told The Defiant via email. “This could, in turn, force the base layer to offload many activities out to Layer-2 solutions like Arbitrum and Optimism.”

This is, however, one of Ethereum’s “many strengths,” Cowan said. “Several Layer 2 networks are thriving atop it even as the base layer does not bring in extravagant transaction fees."

Layer 2 transaction fees are substantially lower than Ethereum fees because transactions are processed off the main chain, bundling a large batch of transactions into a single one on the main chain.

SUBHED: Ethereum killer

Solana is the most successful of the so-called “Ethereum killer” Layer 1 blockchains.

As for Solana overtaking Bitcoin and then Ethereum, Cowan noted that Solana’s heavy focus on scalability and user experience has been causing it to grow rapidly.

“It offers the quickest, cheapest transactions and therefore has become very popular in areas of gaming, NFTs, and DeFi,” he said. “The fee revenues are a result of increased activity but also of more users willing to foot the bill for Solana ecosystems.”

Cowan pointed to Tron’s heavy focus on high throughput, transactions per second, and high-volume, high-frequency activities like stablecoins and decentralized applications (Dapps) that have small and frequent transactions.

“It has helped to establish itself as a high-speed, low-cost platform that fits into the accounts of certain customers and industry sectors with cost being the main factor,” he said.