Top Crypto Companies Earning the Most Fees

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Key Takeaways 

  • Crypto transaction fees are generated when you buy, sell, or move crypto from one address to another.
  • These transaction fees can be a barometer for the growth and vitality of a crypto project, as there tends to be a correlation between transaction fees and a project’s success.
  • Since growing fees can signal great crypto investments, here’s our list of top crypto companies earning the most fees.

Crypto networks charge fees when you buy, sell, or move crypto. These fees help prevent spam, support blockchain security, and aid in platform development: essentially, fees are how crypto companies make money.

Fees fluctuate by network (sometimes even per transaction), and are usually calculated according to urgency, data size, and complexity. For example, a complex transaction on Ethereum (like a payment to many wallets) costs more than a simple transaction (a single wallet).

For crypto investors, fees are a great barometer of a company’s success. Because they are like revenue of a traditional company, they are one of our most important metrics for identifying promising crypto investments. (The others metrics are daily active users, price, and market cap: read more here.)

In this guide, we’ve rounded up the top crypto companies earning the most fees.

Top 5 Crypto Investments, Ranked by Fees

Ethereum

Think of Ethereum like a “world computer” that lets you run shared applications. Ethereum users pay transaction fees, known as gas fees, to use the computer (i.e., conduct transactions on the Ethereum network). The more people who use Ethereum, the more fees the network generates.

As shown in the chart below, Ethereum fees have remained relatively stable over the past year (except in March 2024, when Ethereum completed its Dencun upgrade).

Ethereum gas fees can sometimes be incredibly high due to network congestion, especially during big events. This is why Layer-2 solutions are gaining popularity: they move some of this work onto alternate blockchains, which record their transactions onto Ethereum in a more cost-effective way.

In the long run, these L2s are good for Ethereum, in that they reduce fees and speed up transactions – but some of Ethereum’s fee revenue does get eaten up by the L2s in the meantime. (See our Investor’s Guide to Layer-2s here.)

Tron

Like Ethereum, Tron is an open-source, decentralized blockchain that can execute smart contracts and run decentralized apps (dApps).

Tron generates fees each time a transaction is performed, and the costs are based on energy, bandwidth, and transaction type.

In February 2024, Tron’s fee revenue hit an all-time high of $1.8 million, prompted by Tron’s regular token burning events, where over 12 million TRX tokens were removed from circulation. While transaction fees are still collected on the Tron network, a portion of them are regularly used to buy back and burn TRX tokens, reducing the supply and theoretically increase the value of TRX.

Bitcoin

Bitcoin is the OG crypto. Bitcoin fees are measured in satoshis per byte, where a satoshi is the smallest unit of bitcoin, and are calculated based on transaction size and user demand for block space. Transaction fees are paid to incentivize miners to validate transactions on the blockchain.

As you can see in the graph below, bitcoin saw a spike in fees in March and April 2024. On April 20, bitcoin transaction fees reached an all-time average of $128, coinciding with the fourth bitcoin halving and the launch of Runes, a new protocol allowing users to create fungible tokens on the bitcoin blockchain. However, fees experienced a significant drop the following month as the demand for Runes tapered off.

Lido Finance

Lido Finance is a liquid staking protocol on the Ethereum blockchain, making it easier for users to stake their ETH and earn rewards. (See our guide to investing in Lido here).

Lido charges a flat 10% fee split between node operators and the DAO treasury. The fee can be changed by the DAO pending a successful vote.

Lido Finance fees have remained relatively level for the past year, with a short spike in March-April 2024, coinciding with a spike in the token’s price. However, Lido’s network fees experienced the biggest spike in March and May 2023, when investors could finally withdraw staked ETH.

Uniswap

Uniswap is a decentralized exchange protocol that uses liquidity pools and automated market makers (AMMs) to facilitate peer-to-peer trading. (See our Investor’s Guide to Uniswap here.)

Uniswap charges fees for every trade, distributed proportionally to liquidity providers in a pool. As you’ll note in the chart, its fees spiked in April 2024, when it increased its trading fees from 0.15% to 0.25%. The increase will provide long-term funding for potential legal costs and ongoing development.

The Relationship Between Fees and Project Success

Fees often correlate directly with the success of a crypto company.

Fees can be a crucial indicator of a blockchain project’s utility, demand, and long-term stability. Fee generation is proof of product/market fit, as it shows users are willing to pay for the services offered by a crypto company.

Additionally, protocols that generate substantial revenue from fees are more likely to be stable in the long term, as they have a demonstrable income stream to support growth and operations.

As an investor, analyzing fees can give you a sturdy foundation for valuing cryptocurrencies, helping you move beyond speculation. This can lead to more informed investment decisions, as studying fee growth or decline can help you identify over- or under-valued crypto projects.

Investor Takeaway

For individual investors, we recommend avoiding fees wherever possible. (See our guide on How to Avoid Crypto Fees.)

But when we’re looking for great crypto companies to invest in, fees are one of our most important metrics.

Mostly, fees are good: they show that people are willing to pay for the platform. However, be aware that fees can pose barriers, especially for small transactions. They may indicate network congestion, an ongoing issue for Ethereum and others.

Before investing in a crypto project, we suggest studying its transaction fees and how they are growing or shrinking. And to learn more about which crypto projects are earning the most fees, stay subscribed to our Bitcoin Market Journal newsletter.

The post Top Crypto Companies Earning the Most Fees appeared first on Bitcoin Market Journal.

Source: https://www.bitcoinmarketjournal.com/crypto-companies-earning-the-most-fees/

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