2021 in Fees
What did people pay to use in 2021?
2021 has been an explosive year for cryptocurrencies and blockchain technologies. As assets began crossing all-time-highs, new users began rushing in to try out DeFi, NFTs, and more.
As we prepare for another crazy year in crypto, let's take a look back at some interesting trends that we can see in the 2021 fee data.
Ethereum fees take off
We can't talk about fees in 2021 without mentioning Ethereum's massive revenue numbers. Ethereum's fees peaked out on May 11th with over $117m, before slumping down for the summer.
Native-asset yield farming
In 2020, the period now known as "DeFi Summer" saw explosive growth in DeFi applications. Key to this growth was "yield farming", also known as " liquidity mining", where DeFi protocols would use token issuance to incentivize liquidity and other capital lockups.
While yield farming remains an important primitive of the DeFi ecosystem, 2021 saw these farms augmented with native assets. Polygon, Avalanche and Fantom all allocated substantial amounts of their token supply towards rewards for providing liquidity on decentralized exchanges, lending markets, and more.
The following charts show fees on Avalanche and Fantom, with the beginning of their liquidity incentives denoted by purple dots.
Tokens drive usage, even without incentives
While it seems intuitive that tokens drive usage of projects, the launch of the ENS token provides an interesting case study. The Ethereum Name Service (ENS) launched in 2017, and earns fees from the sale of .eth domain names. While the protocol showed considerable growth throughout 2021, the revenue spiked after the launch of the ENS governance token.
In the month prior to the token launch, the protocol earned an average of $60k per day in fees. Even after the spike of usage had cooled off, the protocol still earned an average of $194k per day (over 3x growth). And unlike many other protocols, this token is not issued to incentivize growth.