A “block,” or “block space" refers to the storage space in a blockchain. In order to use a blockchain, investors and crypto projects need to buy space on the chain to store their information. A "network fee" is money paid to the crypto's miners in exchange for adding information to the blockchain.
A layer-1 (L1) blockchain is a "main" blockchain, such as Ethereum. A layer-2 (L2) blockchain works on top of an L1, usually to offer cheaper and faster transactions with consensus maintained on the L1 blockchain. Polygon (MATIC) is an Ethereum L2.
Ethereum L2s have exploded in popularity this year as the Ethereum network grew more congested, growing to almost $5 billion in total value locked (TVL) after starting the year around $50 million TVL.
Applications buy blocks in blockchains to help operate their own blockchains. Ethereum sells block space primarily to other applications. Ethereum’s massive fee income comes from the gas fees paid for transactions on the Ethereum blockchain. Polkadot and Kusama lease parachain slots to companies that in turn sell that block space to other projects. These projects generate enormous income from their blockchains, their daily fee income is relatively modest.
Rankings from Crypto Fees:
- Ethereum (ETH) - 7 Day Average Fee Income: $67 million per day
- Binance Smart Chain (BNB) - 7 Day Average Fee Income: $5 million per day
- Bitcoin (BTC) - 7 Day Average Fee Income: $1 million per day
- Arbitrum One - 7 Day Average Fee Income: $170,000 per day
- Optimism - 7 Day Average Fee Income: $157,000 per day
- Avalanche (AVAX) - 7 Day Average Fee Income: $107,000 per day
- Fantom (FTM) - 7 Day Average Fee Income: $84,000 per day
- Polygon (MATIC) - 7 Day Average Fee Income: $57,000 per day
- Solana (SOL) - 7 Day Average Fee Income: $43,000 per day
- Cardano (ADA) - 7 Day Average Fee Income: $37,000 per day
It's clear that Ethereum blocks are worth the most, considering Ethereum's staggering lead in fee income and the considerable amount of money locked into its L2 projects. It’s also evident that low-fee networks like Solana struggle to generate significant fee income.