Fee Generation On Ethereum and Solana

Daily Network Fee Generation

For most of their shared history, the daily sum of fees paid by users to the validators of a network for executing transactions, has been significantly higher on Ethereum than it has been on Solana. In fact, daily fees generated on the Solana network only start to appear in a meaningful way on the chart below from January 2024. However, despite Ethereum long holding the crown as the incumbent layer-1 blockchain with the majority of on-chain activity and DeFi applications, since the tail-end of 2024, Solana fees have overtaken fees generated by the Ethereum blockchain.

In this report we will uncover the history of fee generation between Ethereum and Solana, analyse when and why Solana overtook Ethereum in fees generated, and provide some motivation behind why we believe fee generation is an important metric to track and understand. 

Among other factors, both ETH and SOL derive value from their role in securing the network and generating yield to holders by staking. When more on-chain activity takes place, demand for block space increases. This leads users to offer higher gas fees to have their transactions prioritised and results in a larger reward for validators who group transactions into blocks. On Ethereum and Solana, these fees are paid in the native token (e.g., SOL), which increases both the utility and demand of the token. Additionally, staking yield fluctuates as a function of transaction fees – higher transaction fees due to more transactions taking place on the network result in a higher staking yield. In this way, fees generated are a proxy of demand for the underlying token of a blockchain.

Solana’s Emergence

The rapid growth of Solana from January 2024 does however slightly obscure the reality of the blockchain’s progression since its inception in 2020. Daily fees on the Solana network increased from $10K in July 2021 to $300K by November 2021 – the peak of the last crypto cycle. However, despite the 30-fold increase in fees, in absolute terms, the fees generated on the Ethereum mainnet were many orders of magnitude larger. For example, over that same five month period, daily ETH fees increased from $5M to $80M per day (a smaller percentage increase, but far larger absolute values). 

Therefore, despite valiant efforts to dent Ethereum’s position as the central blockchain for DeFi and on-chain activity, and despite growing at a faster pace than Ethereum in terms of fee generation, by the end of the last crypto cycle, Solana had still only captured a fraction of Ethereum’s dominance. So firstly, what could explain the stark difference between the two networks at the time, and secondly, how was Solana able to overtake Ethereum? 

We find the answer to both of those questions lay in DEX volumes. Between May and December 2021, DEX volumes (dominated by Uniswap) on Ethereum were often exceeding $8B per day – in comparison to highs of $300M on Solana. DEX volume is defined as the total value of all trades processed by major decentralised exchanges on a specific blockchain each day. 

DEX volumes on Ethereum rose rapidly in 2021 and reached a local peak of $14B in May 2021 due to its position as the dominant blockchain for DeFi – which first exploded in 2020-21. The majority of lending, borrowing, yield farming and other DeFi protocols were built on Ethereum, and users flocked to Ethereum decentralised exchanges en masse to take part. 

Since then however, excluding a few short-lived spikes, DEX volume on Ethereum has stagnated over the past 2-3 years – averaging $2.1B per day since 2024, a far cry from the 2021 peak of $8B. 

In comparison, the rise in DEX volumes on Solana have been a significant contributor to total network fee generation. The $300M of volume per day towards the tail-end of 2021 exploded to $6B in March 2024 and peaked at a record high of $36B on January 19, 2025 – when President Trump and First Lady Melania both launched their own memecoin tokens. Over that same 2021-2025 period, daily fees rose from $300K per day to record-highs of $31.3M, also on January 19. 

Those huge increases in both DEX volumes and fees generated reflect much of the current crypto cycle having been characterised by retail traders favouring cheaper fees and high-transaction-throughput Layer-1 blockchains, such as Solana, which has given Solana’s DEX’s ample time to catch up to Ethereum. In fact, since late October 2024, ahead of President Trump’s election victory when crypto markets began frothing up with the excitement of a potential pro-crypto President, Solana DEX volumes overtook Ethereum – and have mainly stayed that way since. 

Ethereum’s Demise?

The Ethereum network has undergone a number of upgrades since its inception to enhance its scalability. A big focus within the “Dencun” upgrade of March 2024 and more recently the “Pectra Upgrade” in May 2025, has been on Layer 2 (L2) solutions. The Dencun upgrade added a new type of transaction to the Ethereum network: blob transactions. These allow Layer 2 rollups to store large amounts of transactional data from their own sidechains (validated by validators native to that L2), on the Ethereum Mainnet at a lower cost in their own dedicated space, blob space. 

Unlike regular ETH transactions, blob transactions do not store the full data on-chain. Instead, they only store a hash of the data (a reference to the full data that actually lives off-chain). The introduction of blobs means that L2 transactions do not need to compete with other types of activity for block space, which in turn decreases the gas fees associated with those transactions. A more comprehensive deep dive of Dencun can be found here. 

This is relevant because the comparison between fees generated on Ethereum and Solana in the previous section has only considered fees on Ethereum’s mainnet. While Layer 2 solutions, such as Optimism and Arbitrum, pay fees to live as decentralised applications on the Ethereum mainnet (which is therefore reflected in the total mainnet fee generation), the fees generated specifically by transactions on the L2’s themselves are not included in the total mainnet fees generated calculation. 

What we find is that following the Dencun upgrade, the total fees generated on the Ethereum mainnet plummeted significantly, despite a similar number of transactions still occurring compared to pre-Dencun. In comparison, transactions on L2’s (Arbitrum, Optimism, Matic and Base, though note this is not an exhaustive list) have roughly doubled – a reflection of Ethereum users utilising and benefitting from executing their transactions on ETH L2s, which offer cheaper fees. 

Given the increase in L2 transactions and the constant number of mainnet transactions, L2’s, most particularly Base, have now taken a larger portion of total daily transactions across the entire Ethereum ecosystem. However, while increased fees are being generated on Layer-2s, and still paid in ETH, those fees are no longer being paid by Ethereum mainnet users, but rather by users transacting on L2s – those users are benefiting from the cost-savings of cheaper transactions. However, those cost-savings mean fewer transactions are occurring on the mainnet and therefore ETH holders are collecting lower fees (due to a reduced number of transactions for mainnet validators). This dynamic explains why Ethereum fee generation has declined, even as activity in the broader ecosystem has grown. Additionally, that increase in broader activity is yet to have translated into a meaningful increase in ETH DEX activity either. Even after summing ETH mainnet fees and fees from the four tracked L2’s, Solana is still outperforming the Ethereum ecosystem.

Conclusion

Solana has overtaken Ethereum mainnet in daily fee generation since late 2024, driven by a surge in DEX volumes which peaked at $36B in January 2025. In comparison, fee generation on Ethereum mainnet has collapsed following the Dencun upgrade, as more transaction activity is now occurring on Ethereum Layer 2 solutions. As a result, fee generation is shifting from mainnet users towards Layer 2 users and therefore ETH holders are collecting lower fees. The move towards L2’s has also not translated into a rebound in Ethereum DEX volumes and as such total fee generation across the entire Ethereum ecosystem has been underperforming relative to fee generation on Solana.