Analyzing the Top Cryptocurrency Investments by Fees

At Bitcoin Market Journal, we invest in crypto tokens as if they were stocks. While there are important differences between the two, we analyze crypto “companies” like traditional companies, and diversify our investments with a mix of both. More on our approach here.

Key Takeaways:

• Fees often play a significant role in a crypto project’s success in the long-term: they’re like the fees charged by a traditional company for using their product or service.
• Monitoring fees can give you insight into network usage and demand.
• Some of the top cryptocurrencies by fees include Ethereum, Tron, Tether, Bitcoin, and Lido Finance.

Just as a traditional company generates income by charging customers for its products or services, crypto companies collect fees from users who transact on the network. Essentially, fees are how crypto companies make money.

Think of it like a toll road. Drivers pay a fee to use the road, which is then collected by the company or authority that maintains the infrastructure. The more popular and essential the road, the higher the fee revenue.

Similarly, a blockchain network that processes many transactions—especially if users are willing to pay higher fees for faster service—will generate substantial fees, which can indicate a great long-term investment.

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.

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

Top Crypto Investments by Fees

Ethereum

With almost $2B in fees this year, Ethereum’s high fee revenue is a result of several factors. On one hand, there has been an increase in usage due to the DeFi and NFT market boom.

However, network congestion and gas fee structures also play a role. Ethereum is no stranger to network congestion, and when this happens, users have to bid higher gas fees in order to have their transactions prioritized.

Ethereum also has a base fee mechanism that was introduced in August 2021. The base fee adjusts automatically based on network congestion, with fees rising during periods of high activity. Under this structure, users can also pay “tips” to have their fees prioritized.

Ethereum experienced a spike in fees in March 2024 due to a growth in speculative activity, particularly on decentralized exchanges like Uniswap. This activity was fueled by the rising popularity of ERC-404, an unofficial token standard that enables fractionalized NFTs. These tokens have much higher gas fees — as much as three times more than traditional NFTs – which led to a surge in gas prices.

Broader events in the crypto market also played a role, as BlackRock launched a bitcoin ETF in early March that increased overall interest in cryptocurrencies.

Tron

Tron has earned about $1.35 billion in fee revenue this year, partially due to stablecoin activity, as Tron has become the go-to network for USDT (Tether) transactions. USDT is one of the most popular stablecoins in the world, and Tron’s fast speeds and low transaction costs have made it a preferred network for many stablecoin users.

Unlike Ethereum, Tron is designed for low-cost microtransactions, making it an attractive platform for those performing frequent, small-value transactions. Where Ethereum’s fee growth has been fairly flat, Tron’s fees are definitely growing.

Tether

As of this writing, Tether has earned $1.209B YTD in fees. As mentioned, Tether remains one of the most widely used stablecoins, and it’s a go-to for many for cross-border payments and remittance services, particularly in countries where traditional banking systems are unreliable.

It is also currently one of the most transacted assets on the Ethereum blockchain, and when Ethereum experiences congestion due to high network activity, Tether benefits by earning more in fees.

Tether brings in $13.4 million in fees each day on average

Bitcoin

Bitcoin has earned substantial revenue in fees this year – around $800 million – in part due to a significant uptick in transaction volume.

Additionally, bitcoin introduced the Ordinals protocol in 2023, which allows users to embed data, such as texts or images, directly onto the bitcoin blockchain. This has led to minting more NFTs on bitcoin, which previously was not a widespread practice. Minting NFTs requires more block space, leading to higher transaction fees, particularly in times of high demand.

These “BRC-20 tokens” have also led to speculative trading activity on bitcoin, which has resulted in more network congestion, therefore increasing fees further.

Bitcoin’s fees also spiked in April 2024, due to the highly anticipated halving event on April 20th, wherein rewards for miners were cut in half. This led to increased competition among users trying to have their transactions confirmed on the final blocks before and immediately after the halving.

Despite the spike in fees, things cooled down quickly after the halving, with fees returning to normal levels shortly afterward.

Lido Finance

Lido Finance has earned $780.413M YTD in fees. Lido’s high fee revenue can be partially attributed to it being a dominant blockchain for liquid staking, particularly Ethereum staking.

Additionally, Lido’s liquid staking token, stETH, has become widely used on DeFi protocols. Lido has also expanded its staking services to other PoS networks like Solana, Polygon, Polkadot, and Kusama. This diversification has brought in additional staking fees from these networks, further boosting Lido’s overall earnings.

Crypto Fees vs. Revenues

At Bitcoin Market Journal, we define “fees” and “revenue” differently:

Fees: refers to the total amount of money that users pay to use the network or protocol. It includes transaction fees, swap fees, or other service charges. For example, Ethereum’s fees are what users pay to miners or validators to have their transactions included in the blockchain.

Revenue: Revenue is the portion of the fees that is actually retained by the protocol or distributed to its stakeholders. It represents the “income” that is earned by token holders, developers, or validators after paying for the network’s operating costs.

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.

And fees are only one of the metrics to measure. For our other must-watch metrics, explore our detailed pages on DAUs, revenue, daily active developers, and market cap.

Currently, Ethereum, Tron, Tether, Bitcoin, and Lido are all earning significant fee revenue, but this could change in the future, which is why it’s important to subscribe to the Bitcoin Market Journal investing newsletter.

This analysis is to help make you a better-informed investor; it is not financial advice. Please use this as inspiration to do your own research, because the future may look different than the past. All investing involves risk; see our investing approach for how we manage risk through diversification. Never invest more than you’re willing to lose, and see losses as learning.

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