Ethereum has experienced a remarkable year of growth and transformation in 2020. With major developments like the migration of USDT to its network, the explosive rise of decentralized finance (DeFi), and the successful testing of Ethereum 2.0, the platform has captured significant market attention.
Fueling this momentum, ETH’s price broke through $300, marking an annual increase of over 148%. Beneath the surface of this bullish market trend, Ethereum’s on-chain and mining ecosystems have also undergone substantial changes.
Key Insights at a Glance
- ETH’s price surged 148.62% since the start of the year.
- Daily active addresses on the network increased by 137.93%.
- The number of daily transactions rose by 170.39%.
- The average gas price multiplied by 8 times, and the average transaction fee in fiat terms increased 16-fold.
- Major DeFi protocols like USDT, Uniswap V2, and 1inch are among the top gas spenders.
- Miner revenue climbed 392%, with gas fees now accounting for over 36% of total earnings.
- Two mining pools, SparkPool and Ethermine, dominate over half of Ethereum’s hashrate.
User and Transaction Growth Exceeds 100%
Both market performance and on-chain metrics reflect a significant uptick in Ethereum’s network activity this year.
ETH’s price ascent from around $130 at the beginning of the year to over $300 represents a gain of 148.62%. Aside from a period of high volatility in mid-February to mid-March—driven by global market reactions to the COVID-19 pandemic—the overall trend has been bullish, with a notable acceleration starting mid-July.
This positive momentum is mirrored in on-chain data. Daily transaction counts on Ethereum grew steadily from 466,500 at the start of the year to 1.26 million recently, a jump of 170.39%. The launch of Compound’s COMP token in mid-June marked a turning point: transaction volume surpassed one million per day shortly after and has remained above that threshold since.
Similarly, daily active addresses increased from 231,800 to 551,500—a growth of 137.93%. Since July, daily active addresses have consistently stayed above 500,000, a level previously reached only sporadically.
Gas Fees Multiply as DeFi Drives Network Demand
Rising transaction volume has led to increased competition for block space, driving up gas fees.
The average gas price in Gwei has climbed from 11.7 at the beginning of the year to 96.7 recently—an 8x increase. At this level, the average gas price exceeds even the “Fastest” transaction tier recommended by ETH Gas Station.
In U.S. dollar terms, the rise is even more dramatic. The average gas fee per transaction grew from $0.12 to $1.92—a 16-fold increase. Alternative estimates suggest an even larger jump, with the median gas fee rising nearly 25 times since January.
This surge in fees is largely attributable to booming activity in decentralized finance. Over the past 30 days, USDT has spent nearly $1.97 million on gas fees. Other major gas spenders include Uniswap V2 ($649,000), 1inch, IDEX, and Synthetix, each of which spent over $100,000. 👉 Explore more strategies for managing gas costs
It is worth noting that several entities identified as potential Ponzi schemes also ranked among the top gas consumers.
Miner Revenue Jumps 392% as Fee Share Grows
While Bitcoin miners faced reduced rewards post-halving, Ethereum miners enjoyed a year of “excess returns.”
Ethereum’s network hashrate grew by just 32.05% since January—far less than the increase in ETH’s price. This discrepancy allowed miners to earn significantly higher rewards relative to their operating costs.
Miner revenue—considering block rewards and gas fees—soared 392% since the start of the year, reaching $6.57 million in a single day recently. Gas fees now constitute over 36% of total miner revenue, up from less than 3% in January. This stands in stark contrast to Bitcoin, where transaction fees traditionally account for a much smaller portion of mining income.
Two Mining Pools Control Half the Market
Ethereum’s mining landscape is characterized by high concentration among top players and a long tail of small participants.
SparkPool and Ethermine together control 51.69% of the network’s hashrate over the past three months. F2Pool, SpiderPool, and NanoPool also hold significant shares, each above 5%.
At the same time, 136 individual miners or pools have participated in block production during this period. Nearly half of them (47) mined only one block, and many others produced very few blocks. This suggests that Ethereum’s mining ecosystem is less mature and more fragmented than Bitcoin’s.
The two largest pools also exhibit high uncle rates—19.20% for SparkPool and 16.44% for Ethermine—which can further boost their earnings. Additionally, empty block rates are notably high among major pools, though strategies regarding empty blocks may shift with changing gas fee dynamics.
Frequently Asked Questions
What caused Ethereum’s surge in activity in 2020?
The growth was driven by several factors, including the expansion of USDT on Ethereum, the rapid rise of DeFi applications like lending and decentralized exchanges, and positive developments around Ethereum 2.0.
Why have gas fees increased so much?
Higher demand for block space due to increased DeFi transactions has driven up gas prices. Users are willing to pay more to ensure their transactions are processed quickly.
How are Ethereum miners benefiting from this activity?
Miners earn both block rewards and transaction fees. With fees now making up over 36% of revenue—and total revenue up nearly 400% since January—miners are earning significantly more.
Is Ethereum’s mining ecosystem centralized?
Two mining pools control over half of the network’s hashrate, indicating a relatively concentrated landscape. However, a long tail of small miners also exists, suggesting both centralization and fragmentation.
What does high gas fees mean for everyday users?
High fees can make small transactions uneconomical. Users may need to be more selective about when they transact or use layer-2 solutions once available.
Are Ethereum’ high fees sustainable?
Sustainability depends on scaling solutions. Ethereum 2.0 and other upgrades aim to greatly increase transaction capacity and reduce fees over time.
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Note: All data referenced in this article covers the period from January 1, 2020, to July 27, 2020.