When transaction fees are no longer a barrier, what will public blockchains rely on to win?

Article by: Tanay Ved, Coin Metrics

Compiled by: Luffy, Foresight News

TL;DR

As blockchain scaling increases and transaction costs fall, differentiation among public chains is shifting from cost competition to scenario-based specialization.

In March, Bitcoin mined its 20 millionth token, and the wrapped token and ZK Rollup ecosystem continues to grow, gradually unlocking Bitcoin’s programmability and asset utility.

Ethereum is consolidating its position as an on-chain liquidity and settlement hub; L1 fees hit a historic low, while L2 has evolved from a scaling solution into a specialized execution environment.

Solana continues to push toward its “internet capital markets” vision: payment adoption is rising, on-chain transaction infrastructure is becoming increasingly mature, and the Alpenglow upgrade targets achieving sub-second finality.

As block space on each network continues to scale up, on-chain transaction costs have fallen dramatically. After a recent upgrade, Ethereum mainnet fees dropped significantly; Solana’s transaction fees remain within a few cents, and L2 networks also provide a similarly low-cost execution environment. In a context of continually compressed costs, differentiation in block space depends more and more on ecosystem liquidity, throughput, and scenario specialization—not simply on marginal cost advantages.

This article explores how major public chains evolve around their respective positioning: Bitcoin expanding programmability and asset utility; Ethereum strengthening its role as the liquidity and settlement center for stablecoins, real-world assets (RWA), and DeFi; and Solana focusing on high-frequency payments and trading scenarios.

Bitcoin

In March 2026, the 20 millionth Bitcoin is mined, meaning the remaining unissued Bitcoins are only 1 million. Over 95% of Bitcoin’s total supply has already entered circulation. After the April 2024 halving, the block reward fell to 3.125 BTC, and issuance speed declines according to the established schedule.

Bitcoin mining speed, data source: Coin Metrics

As block rewards decrease, the importance of transaction fees in miners’ revenue keeps rising. Excluding the occasional periods of explosive spikes, transaction fees account for less than 1% of miners’ total revenue. Because all Bitcoin fees go to miners, the long-term core issue in its security model is whether naturally generated fee demand can continue to fill the gap created by falling block rewards.

Making Bitcoin programmable and assetized

Although Bitcoin’s market cap is about $1.3 trillion, about 60% of BTC has not moved in one year. Approximately 2.4 million BTC (11% of the supply) is held in centralized exchanges, and another 243k BTC circulates on other public chains in the form of wrapped tokens.

Most of Bitcoin’s capital is still idle, and the vast majority of related activity and fee generation occurs outside the main chain.

Bitcoin’s functional role is evolving along two main tracks: expanding underlying programmability and enhancing BTC’s asset utility. Sidechains, the Lightning Network, and other L2 solutions, wrapped BTC, and liquid staking protocols continue to enrich Bitcoin’s toolkit—improving its real-world usability—while also introducing varying degrees of trust assumptions, from full custody to smart contracts.

Market cap of wrapped Bitcoin, source: Coin Metrics

In the most “minimally trusted” direction, Citrea stands out as a ZK Rollup that settles directly on Bitcoin L1. It uses the BitVM framework to verify programs within Bitcoin’s existing scripting system, enables EVM-compatible applications, and secures everything with Bitcoin’s proof-of-work. Unlike sidechains, it completes settlement on Bitcoin directly via zero-knowledge proofs, while withdrawals rely on a non-custodial bridge.

Meanwhile, assetized applications of BTC as collateral continue to grow. The total value of wrapped BTC across chains exceeds $15 billion. Coinbase’s cbBTC in Morpho’s lending market has also surpassed $1 billion. Liquid staking protocols such as Babylon further expand this use case, allowing BTC to provide economic security for external proof-of-stake networks. These developments are gradually unlocking the assetization potential of long-idle capital.

Ethereum

Ethereum remains the global on-chain liquidity and settlement hub. It has about 62% of the total stablecoin market cap, boasts the deepest DeFi liquidity among all public chains, and also serves as an important circulation platform for tokenized real-world assets (RWAs), covering money-market funds, tokenized Treasuries, stocks, and more.

Recent upgrades further strengthen Ethereum’s position as the core layer underlying economic activity. PeerDAS, a larger Blob space, and upgrades such as Pectra and Fusaka—bringing higher Gas limits—push L1 fees down to multi-year lows and expand the range of activities that can be directly settled on the mainnet.

Ethereum daily active addresses and trading volume, data source: Coin Metrics

Ethereum mainnet daily active addresses and transaction volume are nearly doubling year over year, with both breaking 1 million and 2.4 million respectively. But as we found earlier, part of this growth comes from address poisoning attacks and low-value economic activity addresses (where transaction value is below $1), and such addresses can sometimes account for an extremely high share of daily active addresses.

Shifts in the L1 and L2 relationship

As L1 transaction costs fall significantly, the role of Ethereum L2 networks is being redefined. L2 was originally designed as Ethereum’s core scaling solution, reducing costs by separating out the execution layer. Today, that positioning is shifting.

According to a recent blog post from the Ethereum Foundation, L2’s core mission has become providing differentiated features, customization capabilities, and specialized execution environments—while scaling is only a secondary function.

Blob space utilization for submitting transaction data to Ethereum is under 30%. After scaling, there are about 3 Blobs per block on average. Blob usage is concentrated in a small number of L2s, and the related costs are negligible as a share of total transaction fees. With L1 scaling outpacing L2 settlement demand, settlement costs on Ethereum no longer form a barrier for most L2s.

Average number of Blobs per Ethereum block, data source: Coin Metrics

The L2s that see sustained growth are the ones with unique value: Base leverages its distribution advantage built on Coinbase, while Arbitrum relies on deep DeFi liquidity. New-generation specialized public chains such as MegaETH, Lighter, Robinhood Chain, and Ink target specific scenarios, offering new business models and distribution channels.

Ethereum’s roadmap further drives deep integration between L1 and L2 through interoperability mechanisms like native rollups and minimal-trust architectures, solidifying its position as the ecosystem’s liquidity and settlement core.

Glamsterdam and other upgrades

The Glamsterdam upgrade plan is scheduled to go live in the first half of 2026, continuing this trend. By raising the Gas limit to 200 million and introducing parallel transaction execution, this upgrade aims to significantly increase L1 throughput while lowering fees for complex smart contract interactions. In addition, the proposer-builder separation mechanism (ePBS) integrates block building into the protocol, reduces the centralization degree of MEV, and improves transparency in transaction ordering. These changes are intended to make Ethereum L1 a more competitive execution environment and preserve its position as a trusted platform for high-value settlement and DeFi.

Solana

Solana is shedding the early label of “retail and Meme coin chains” and moving toward its internet capital markets vision. Transaction fees are under $0.01 and block production time is below 400 milliseconds, making it a natural home for high-frequency applications such as payments, micropayments, and high-frequency trading. This characteristic attracts a set of professional applications that need large-scale, low-latency execution.

Since the end of 2024, non-vote transactions on Solana have nearly doubled, with daily averages surpassing 120 million.

Number of non-vote transactions on the Solana network, data source: Coin Metrics

Payments and high-frequency micropayments

Solana’s low-cost environment makes it a leading public chain for payments and personal-value transfers. USDC transfers under $1,000 average about 3 million per day, and the median transaction amount has continued to stay below $100.

An emerging development is the x402 protocol, an open HTTP payment protocol launched by Coinbase that allows any API or digital service to charge stablecoin fees on request. Although chain competition is fierce—such as Base and Stripe’s Tempo—Solana still captures a large share of x402 transactions, becoming an early on-ramp for agent micropayments.

Transaction infrastructure

Solana’s high throughput also attracts specialized on-chain transaction infrastructure. Proprietary AMMs (propAMMs) built by professional market makers use private off-chain pricing models, more like dark pools than public DEXs. Unlike AMMs such as Uniswap, which are vulnerable to front-running and arbitrage, propAMMs update prices off-chain and complete settlement on Solana, giving them resistance to MEV.

Alpenglow and other upgrades

The upcoming infrastructure upgrade will further strengthen Solana’s advantages. Alpenglow replaces the existing consensus with a lightweight voting aggregation protocol called Votor. The goal is to reduce block finality time from about 12 seconds to 100–150 milliseconds. The block-assembly marketplace developed by Jito allows transaction applications to independently control transaction ordering and supports functions such as canceling priority, improving execution fairness.

Conclusion

As block space scales up and costs compress, the core of competition in the public chain industry is shifting from costs to specialized division of labor. Major public chains leverage their architectural advantages to meet diverse scenario demands; specialized chains such as Hyperliquid, Canton, Arc, and Tempo optimize extremely around application requirements, making clear trade-offs in permissioning, compliance, and execution design. The key question going forward is how the industry landscape will evolve when on-chain demand truly explodes at massive scale.

All on-chain infrastructure still faces shared risks. Google’s Quantum AI, in a paper dated March 31, points out that breaking the elliptic-curve cryptography relied on by mainstream blockchains such as Bitcoin and Ethereum would require physical quantum bits numbering fewer than 500k—only 1/20 of the previously estimated 20 million. Early proposals such as Bitcoin BIP-360 and Ethereum post-quantum roadmaps have begun to take shape. The deeper challenge is how, in decentralized networks, to coordinate community consensus and voluntary adoption; this process may be slower and harder to predict than for centralized institutions.