Which crypto protocols bring in the biggest fees and costs per user?

Fees in the Cryptocurrency Market: A Proxy for Activity and Impact

Fees generated by cryptocurrency protocols serve as indicators of protocol activity and the overall health of the market, particularly during bull runs. DeFi protocols and platforms measure user engagement and activity spikes through fees.

Leading Protocols by Fees

Undoubtedly, Bitcoin and Ethereum dominate in daily fee generation due to their network size. They also incur expenses for mining or block production rewards. Ethereum reigns supreme with average daily fees exceeding $5.6 million, while Bitcoin generates more value through block rewards.

Fees in Smaller Projects

Fees in smaller projects provide a more nuanced picture, reflecting behaviors such as trading, staking, NFT minting, identity features, and other Web3 applications. They indicate the project's functionality beyond basic payments and transactions.

High-Fee Blockchains

During the 2024 market surge, the most widely used blockchains, including Binance Smart Chain, Arbitrum One, Optimism, and Polygon, exhibited elevated fee levels.

Active DEX and Liquidity Staking Protocols

The most fees are generated by active DEX and liquidity staking protocols such as Uniswap, Sushi Swap, Aave, Maker, Kyberswap, Curve, and Trader Joe.

Dogecoin: A Surprising Entry

Dogecoin remains active on its main net and is used for transfers and inter-protocol transactions. Despite limited scaling, its low fees make it still appealing as a main net asset, even without the support of native DeFi or DEX applications.

Most Expensive Protocols for Users

While most protocols aim to minimize fees and profit from volume, some incur higher costs for users. Ethereum charges $14 in fees per average user among commonly used networks. On-chain derivative trading is also costly, with average fees exceeding $300 per user.

Fees Per User: A Diverse Perspective

Cross-matching daily active users with daily fees reveals a diverse picture of fees per user. Telegram, Base, and Solana emerge as the most cost-effective protocols per user, fulfilling their promises of scalability and mass adoption.

Fees as a Reflection of Trends

Fees can also indicate the prominence of specific trends. Lido Finance captures approximately 50% of all liquid staking fees, reaching $3.6 million daily. Some projects, such as Maker DAO and Ethena, have unpredictable fee patterns, with exceptional gains on days with special events or NFT minting activity.

Leading Fee Producers

Aave is the leading fee producer among lending protocols, generating $1.36 million daily fees. Uniswap dominates DEX protocols with $2.75 million in daily fees. Convex Finance is the major fee earner in asset management, generating up to $177,000 per day.

Fees and Market Growth or Decline

Fees can also signal the trajectory of crypto narratives. Friend.tech, once a thriving social media platform with Web3 elements, has experienced a decline in daily fees to $4.6k. Ethereum, despite its unpredictable fees, is driving growth in L1 miner income.

Fees vs. TradFi: A Comparison

In comparison, the average Visa card fee is $3.96 per purchase, typically charged to merchants. Crypto fees are generally lower but can create barriers to entry for small-scale users in DeFi, favoring larger investors.