Coin Metrics: Current State of the Layer 1 Token Market

Fee Market Focus

As providers of limited block space, Layer 1 blockchains and their validators (in PoS) or miners (in PoW) are compensated through transaction fees paid by users who want their transactions included in the network. While fee mechanisms may vary across L1s, they are a source of incentives for network participants and a source of revenue for Layer 1 networks, typically paid in the network's native token (i.e. BTC, ETH, SOL).

Source: Coin Metrics Network Data Pro

As shown in the figure above, each L1 Total fees on Ethereum vary based on blockspace demand, with market events and fee structure influencing this variation. For example, Ethereum has historically maintained the highest total fees, averaging around $4-5 million under normal market conditions, with occasional spikes during periods of peak network activity. This was evident in March, when total fees reached $38 million, while on-chain activity around the Japanese yen carry trade on August 5th drove fees to $16 million.

Total fees on Ethereum have declined relative to historical data, and while Solana has lower average transaction fees, it has succeeded by supporting a higher frequency of lower-value transactions—although it has been trending downward recently. On Bitcoin, network-specific events such as Bitcoin’s ^fourth halving, the launch of Runes, and the recent introduction of Bitcoin staking have led to periodic spikes in transaction fees as a percentage (%) of miner revenue.

It is also important to consider the destruction and issuance mechanisms employed by L1s, which directly impact the supply dynamics of their native tokens - impacting holders/stakers through scarcity or staking rewards.

Ethereum - Ultrasonic Money and Accessibility

As Ethereum continues to evolve through its rollup-centric roadmap, EIP-4844, which introduced blobs, has reduced L2 transaction fees to a fraction of a dollar, making its layer 2 ecosystem more accessible. However, in the short term, this arguably comes at the expense of total fees generated on the mainnet (L1). As a result, this has hampered the rate of ETH destruction, which has dropped to a minimum of 80 ETH or $194,000. Such is the dual nature of “ultra-sound money”, which creates deflationary pressure on ETH while making Ethereum friendly to everyone, while also surging ETH on its layer 2 (L2).

Source: Coin Metrics Network Data Pro

Solana - To Prioritize or Not To Prioritize

Solana’s fee mechanism is structured differently, with a fixed base fee of 5,000 lampor (0.000005 SOL, the smallest unit of SOL) per signature. Users on Solana pay the same base fee whether they are minting new memecoin or making a token transfer on a DEX. This is unlike Ethereum, where the base fee dynamically adjusts based on network demand. The priority fee, on the other hand, is an optional fee that users can pay to increase the likelihood of a transaction being included by the lead validator, where 50% is burned and 50% goes to the validator. However, estimating the optimal priority fee can be challenging due to fluctuating demand, leading to situations where non-priority transactions are too expensive to be executed in a block.  

Source: Coin Metrics Network Data Pro

Driven by the overall market and memecoin surge, Solana’s total fees are in A peak of $4.5 million was reached in March. At this time, priority fees accounted for 95% of total fees (a figure that has remained around 80% since August), representing high demand for transaction inclusion. However, activity has decreased significantly, and currently total fees are $732K and priority fees are $533K.

Adoption and Usage Characteristics

Typical usage patterns of layer 1 blockchains can vary, with some blockchains optimized for high-volume, small transactions and others excelling at processing large transactions. Therefore, it is important to consider the "economic throughput" of these systems holistically, rather than simply the number of transactions.

Source: Coin Metrics Network Data Pro, Nic Carter: Transaction Count is a Poor Metric

As shown above, low-fee networks like Solana are optimized for high-frequency, low-value transactions. Notably, Solana also includes validator vote transactions in blocks (which have been removed from this graph to represent user transactions). Bitcoin typically sees high-value transfers, consistent with its role as a store of value and settlement layer, while Ethereum falls somewhere between high-value transfers and more frequent, lower-value transactions, reflecting its nature as a general-purpose blockchain. Avalanche’s variability shows that the network is able to adapt to different use cases due to its multi-chain architecture.

Daily active addresses on layer 1 represent the number of unique addresses active in the network each day and can be used as an indicator of blockchain adoption and activity. While Bitcoin (672K) and Ethereum L1 (500K) have maintained relatively stable active address counts, Solana has seen ~219% growth in active wallets since January 2024 to over 1.5M. When interpreting this metric, it is important to consider differences in blockchain architecture (UTXO vs. account-based models), potential inflation due to bot activity, and the fact that addresses do not necessarily equate to unique users.

Conclusion

As the foundational layer of the on-chain ecosystem, Layer-1 will continue to receive widespread attention. Looking ahead, technical improvements and the ability to attract adoption through their applications will shape the future of these networks. Ethereum’s upcoming Pectraupgrade, as well as discussions around optimizing blob price discovery and L1 scalability, will enhance its performance and accessibility. Solana’s Breakpoint conference may reveal key developments that further improve its high-throughput capabilities. Meanwhile, new entrants like Monad present growth opportunities and intensify the competitive landscape.

While each Layer-1 follows its roadmap, they may converge with different trade-offs — balancing scalability, security, and decentralization to meet the growing demands of blockchain adoption.