Tron Poised To Threaten Ethereum's Revenue Dominance

While Ethereum currently leads the web3 sector by annual fee revenue, a recent crash in gas prices has Tron poised to undermine its dominance.

According to data from Lookonchain, the Ethereum network generated $2.73 billion in revenue over the past 12 months, beating out Bitcoin with $1.30 billion, and Tron with $459.4 million. Ethereum accounted for 53.5% of the fees amassed by the top nine blockchains by revenue, while Bitcoin made up 25.5%, followed by Tron with 9%.

However, with Ethereum’s gas fees recently plummeting to multi-year lows, Ethereum appears poised to slip down the rankings.

According to annualized data based on the past 30 days from TokenTerminal, Ethereum is on track to generate annual revenue of $1.65 billion. That would position Ethereum in second place behind Tron, which is set to accrue $1.72 billion in fees over the next 12 months.

While Bitcoin’s revenue appears on course to tag $1.17 billion in 12 months, annualized fortnightly fee volume would place the figure at just $450 million.

Plummeting gas fees on Ethereum

Ethereum’s gas fees have plummeted since March, with average daily gas prices crashing 88% from a year-to-date high of 98.7 gwei on March 5 to 11.6 gwei today, according to Etherscan.

Data from Dune Analytics also shows average gas prices slipping below 3 gwei on June 29 and June 30 — its lowest level since 2016.

The fall in gas prices coincided with the activation of Ethereum’s Dencun upgrade, which significantly lowered Layer 2 transaction costs by replacing gas-intensive calldata with lightweight Binary Large Objects (blobs).

Data from GrowThePie revealed that the costs associated with Layer 2 networks submitting transactions to the Ethereum mainnet for finalization have dropped by orders of magnitude since the upgrade went live.

While top L2s including Arbitrum, OP Mainnet, ZkSync Era, and Base paid between $262,000 and $601,000 in mainnet fees on March 5, the networks are now paying between a few hundred dollars and $3,000.

Although low fees make it easier for users to onboard onto Ethereum, the trend is also threatening Ethereum’s deflationary narrative. With the number of Ether burned through transaction fees also plummeting, Ethereum is now inflating by approximately 50,000 ETH per month, according to Ultra Sound Money.

Tron activity surges

By contrast, Tron’s fee revenue is surging as an increasing number of users adopt the network as a vehicle for low-cost stablecoin transfers.

A November 2023 paper from Brevan Howard showed more than 2.4 million wallets interacting with USDT on Tron weekly, compared to just 265,000 on Ethereum. In April, IntoTheBlock shared data indicating weekly USDT volume on Tron was double that of Ethereum at $110 billion. According to Lookonchain, daily USDT volume on Tron was $16.9 billion on June 26.

More than 53% of Tether’s supply or $59 billion USDT currently resides on Tron, beating out Ethereum with $50 billion or 44%, according to Tether.

Bitcoin revenue recedes

While Bitcoin posted strong annual fee revenue amid congestion caused by the rise of inscriptions, fee revenue has recently plummeted as inscriptions activity declined.

Inscriptions were introduced in January 2023 with the launch of Ordinals, which allowed users to create NFT-like assets by inscribing data into Bitcoin satoshis. Ordinals also gave rise to BRC-20, which allowed users to inscribe fungible tokens on the Bitcoin blockchain as well.

Inscriptions soared in popularity throughout Q2 and Q3 of 2024, driving Bitcoin transaction volumes to record highs alongside a spike in fee revenue. The sector enjoyed a resurgence in November and coincided with increased market activity amid spot Bitcoin ETF hype, with miners earning hefty revenues until inscriptions volume again pulled back in February.

In April, Bitcoin’s fee revenue briefly rocketed to its second-highest level on record amid the launch of Runes, a protocol for creating fungible tokens that sought to overcome many of the inefficiencies associated with BRC-20.

However, the initial flurry of Runes activity quickly dropped off, with Runes now accounting for 24.5% of Bitcoin transitions, down from a high of 77.3% on April 20, according to The Block.

As such, Bitcoin’s daily fee revenues have stabilized near $1 million daily in recent weeks. For comparison, the figure trended between $2 million and $10 million in January.