Ethereum’s co-founder Vitalik Buterin has stated current fees are now enough by themselves to cover estimated staking rewards.
“For the last week ethereum tx fee revenue has exceeded most estimates of what PoS validator rewards will be,” Buterin said.
Miners are currently receiving more than 2,000 eth in fees, worth about half a million dollars a day.
That’s on top of the 13,700 eth they receive through block rewards, with the plan being for miners to eventually be fully replaced by stakers.
According to Buterin estimates are for stakers to receive about 2,000 eth a day, with fees now reaching that level by themselves.
“This is an important milestone for economic sustainability,” he said, echoing Gregory Maxwell who popped the champaign at the very peak in December 2017 when bitcoin fees reached the level of the block reward.
The suggestion is that this proves a crypto with a fixed issuance limit can still pay for its security through fees.
“The internet of money should not cost 5 cents a transaction. It’s kind of absurd,” Buterin said just days before Maxwell celebrated back in December 2017 and just days before ethereum itself reached the capacity limit.
“Oh I still agree with that. It’s why we’re working on rollups and sharding. A transaction inside the Loopring zk rollup costs under $0.01 even with the high gas fees,” he said.
When exactly sharding is to be expected is very unclear except that it will be years not months. For now they could increase capacity to at least match bitcoin’s 2MB of data every ten minutes, with eth currently running at the equivalent of 1MB of data.
However ethereum devs are now saying on-chain capacity shouldn’t be increased with Peter Szilagyi stating “I personally would advise against raising the gas limit.” The gas limit being eth’s version of the blocksize limit.
Ethereum has been running at that limit for now years, with some 85,000 transactions currently waiting to move.
Smart contract transactions are now getting fairly expensive, and even for simple transactions fees are rising, with the average fee per transaction in general currently being 60 cent.
Ethereum therefore can’t easily accommodate many new users even at the current price level, which is some 85% below the peak, let alone at the price of say $1,000.
Bitcoin fees have been rising too, but they do have available capacity, it’s just that entities need to upgrade and take advantage of the available methods.
In addition bitcoin fees are a bit more complex in that you have to account for inputs, which then would put the fees at around $1, a level probably set by miners themselves regardless of capacity.
Plus of course bitcoin is half way to the peak, instead of way down to the bottom like eth, and nonetheless still has available capacity and may well increase it further.
While on eth this is already at its limit, with usage seemingly now at or near the peak price levels, but price isn’t anywhere near that peak because of the considerable inflation which requires usage to increase as otherwise price falls if usage remains the same.
As they can’t or won’t increase capacity, however, they’re now implying higher fees are a good thing. So making eth as it stands not really an alternative to bitcoin but more just a smart contracts platform.