Ethereum Miners made $166 million in fees in September

DeFi market was essential for high return of miners

The Ethereum miners had their biggest gains in history in September 2020, according to data from Glassnode. The growth of the decentralised finance market (DeFi) was an important factor behind this increase.

The increase in the network and individual smart contract activity lead to higher rewards for the miners, as participants bid higher to execute their transactions faster.

„Ethereum’s miners made a total of US$166 million in transaction fees in September – a new [historical record],“ Glassnode said in a tweet. The metric represented an increase of 47 percent compared to the previous record set in August.

In contrast, the Bitcoin miners earned only US$26 million in fees over the past month.

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Some mining market players said much of the growth came as commercial activity in low-capitalization DeFi projects – often with names that sound funny like „Meme“ and „Shroom“ – increased.

„Because of the DeFi boom, the transaction fees and earnings of the mining company were really high,“ Thomas Heller, chief operating officer of mining company Hashr8, told Decrypt.

Why this explosion in revenue?
DeFi tokens are typically traded on decentralized exchanges (DEXs), such as Uniswap, which currently has more than $2 billion in liquidity, according to the DeFi tracking site Pulse.

Compared to centralized exchanges (CEXs) such as Binance, all DEX transactions are carried out in the Ethereum blockchain, unlike the internal mechanisms of a regular brokerage house. This means that miners approve and conduct each DEX trade and therefore earn money on each trade.

In March and April this year, Glassnode data showed that Ethereum miners earned an average of US$4 million in fees. However, the gains began to increase in June and July, when the DeFi industry began to gain momentum due to the launch of the Compound loan protocol. Mining earned US$22 million and US$32 million in June and July, respectively, the figures show.

Ethereum rates have skyrocketed since June 2020
Gains are likely to increase as more smart contract negotiations, transactions and interactions are made on the Ethereum network. And while some industry analysts say DeFi may be a bubble, the mining companies probably hope it doesn’t burst anytime soon.