As transaction fees decline, public chains compete on specialization and use cases.

Article by Tanay Ved, Coin Metrics

Compiled by: Luffy, Foresight News

TL;DR

• As blockchain scaling improves and transaction costs decline, differentiation among public chains is shifting from cost competition to specialized, use-case-driven roles.
• Bitcoin reached the mining of its 20 millionth token in March, while wrapped tokens and the ZK-Rollup ecosystem continue to grow, gradually unlocking Bitcoin’s programmability and asset utility.
• Ethereum solidifies its position as the leading on-chain liquidity and settlement hub, with L1 transaction fees reaching an all-time low, while L2s evolve from scaling solutions into specialized execution environments.
• Solana continues to advance its vision of the "Internet Capital Market," with growing payment adoption and increasingly mature on-chain transaction infrastructure, aiming to achieve sub-second finality with the Alpenglow upgrade.

As blockchain network block space continues to expand, on-chain transaction costs have dropped significantly. Following its recent upgrade, Ethereum mainnet has seen a substantial reduction in gas fees, while Solana transactions remain under a few cents, and L2 networks offer similarly low-cost execution environments. In this context of continuously declining costs, differentiation in block space is increasingly determined by ecosystem liquidity, throughput, and scenario specialization—rather than marginal cost advantages alone.

This article explores how leading blockchains are evolving around their respective positions: Bitcoin is expanding its programmability and asset utility; Ethereum is solidifying its role as the central hub for liquidity and settlement in stablecoins, real-world assets (RWA), and DeFi; and Solana is focusing on high-frequency payment and transaction scenarios.

In March 2026, the 20 millionth Bitcoin was mined, leaving only 1 million Bitcoins remaining to be issued. Over 95% of Bitcoin’s total supply is now in circulation, and following the April 2024 halving, the block reward decreased to 3.125 BTC, reducing the issuance rate according to the predetermined schedule.

The rate of Bitcoin mining, data source: Coin Metrics

As block rewards decrease, the importance of transaction fees in miners' income continues to rise. Excluding periods of temporary spikes, transaction fees account for less than 1% of miners' total revenue. Since all Bitcoin transaction fees go to miners, the long-term core question for its security model is whether naturally occurring fee demand can consistently fill the gap left by declining block rewards.

Make Bitcoin programmable and assetized

Despite Bitcoin's market capitalization of approximately $1.3 trillion, about 60% of BTC has not moved in a year; around 2.4 million BTC (11% of the supply) are held on centralized exchanges, and another 243,000 BTC are circulating on other blockchains as wrapped tokens.

Most of Bitcoin's funds remain idle, and the vast majority of related activity and fee generation occurs off-chain.

The functional role of Bitcoin is evolving along two main axes: expanding its underlying programmability and enhancing its asset utility. Layer 2 solutions such as sidechains and the Lightning Network, wrapped Bitcoin, and liquid staking protocols are continuously growing, increasing Bitcoin’s practicality—but also introducing varying degrees of trust assumptions, from full custody to smart contracts.

Market capitalization of wrapped Bitcoin, source: Coin Metrics

In the direction of minimal trust, Citrea stands out as a ZK Rollup that settles directly on Bitcoin L1. It leverages the BitVM framework to verify programs within Bitcoin’s existing scripting system, enabling EVM-compatible applications secured by Bitcoin’s proof-of-work. Unlike sidechains, it settles directly on Bitcoin via zero-knowledge proofs, with withdrawals facilitated by a non-custodial bridge.

Meanwhile, the assetization applications of BTC as collateral continue to grow. The total value of wrapped Bitcoin across various chains exceeds $15 billion, and the lending market size for Coinbase’s cbBTC on Morpho has surpassed $1 billion. Liquid staking protocols like Babylon further expand this use case by enabling BTC to provide economic security for external proof-of-stake networks. These advancements are gradually unlocking the assetization potential of long-idle capital.

Ethereum remains the global hub for on-chain liquidity and settlement. It holds approximately 62% of the total market capitalization of stablecoins, boasts the deepest DeFi liquidity among all public blockchains, and serves as a major platform for the circulation of tokenized real-world assets (RWA), including money market funds, tokenized government bonds, and stocks.

Recent upgrades have further solidified Ethereum’s base layer as the core of economic activity. PeerDAS, increased blob space, and the Pectra and Fusaka upgrades, which raised gas limits, have driven L1 transaction fees to multi-year lows, expanding the range of activities that can be settled directly on the mainnet.

Ethereum trading volume and active addresses, data source: CoinMetrics

Ethereum mainnet daily active addresses and transaction volume have nearly doubled year-over-year, surpassing 1 million and 2.4 million, respectively. However, as we previously noted, some of this growth stems from address poisoning attacks and low-value economic activity addresses (transactions under $1), which at times constitute a very high percentage of daily active addresses.

The shifting relationship between L1 and L2

As L1 transaction costs have dropped significantly, the role of Ethereum L2 networks is being redefined. Originally designed as Ethereum’s core scaling solution by offloading execution to reduce costs, this positioning is now evolving.

According to a recent blog post from the Ethereum Foundation, the core mission of L2 has shifted to providing differentiated features, customizable capabilities, and specialized execution environments, with scaling now being a secondary function.

L2 blob space utilization for submitting transaction data to Ethereum is below 30%, resulting in approximately 3 blobs per block on average after scaling. Blob usage is concentrated among a few L2s, and associated fees account for a negligible portion of total transaction fees. L1 scaling has outpaced L2 settlement demand, making Ethereum settlement costs no longer a barrier for most L2s.

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

The L2s that achieve true sustained growth are those with unique value: Base leverages Coinbase’s distribution advantage, while Arbitrum establishes itself with deep DeFi liquidity. New-generation specialized blockchains such as MegaETH, Lighter, Robinhood Chain, and Ink target specific use cases, offering novel business models and distribution channels.

The Ethereum roadmap further deepens the integration of L1 and L2 through native rollups and a minimal-trust architecture, reinforcing its position as the core hub for ecosystem liquidity and settlement.

Glamsterdam and Other Upgrades

The Glamsterdam upgrade, scheduled for the first half of 2026, will continue this trend. By increasing the gas limit to 200 million and introducing parallel transaction execution, this upgrade aims to significantly boost L1 throughput while reducing fees for complex smart contract interactions. Additionally, the embedded Proposer-Builder Separation (ePBS) mechanism integrates block building into the protocol, reducing MEV centralization and improving transaction ordering transparency. These changes are designed to make Ethereum L1 a more competitive execution environment, preserving its position as a trusted platform for high-value settlement and DeFi.

Solana is shedding its early reputation as a "retail and meme coin chain" and moving toward its vision of an internet capital market. With transaction fees under one cent and block times under 400 milliseconds, it is naturally suited for high-frequency applications such as payments, micropayments, and high-frequency trading. This capability attracts professional applications requiring large-scale, low-latency execution.

Since the end of 2024, Solana's non-voting transactions have nearly doubled, averaging over 120 million per day.

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

Payments and High-Frequency Micropayments

Solana’s low-cost environment has made it the leading public blockchain for payments and peer-to-peer value transfers. Daily USDC transfers under $1,000 consistently average around 3 million transactions, with the median transaction amount remaining below $100.

An emerging development is the x402 protocol, an open HTTP payment protocol launched by Coinbase that enables any API or digital service to charge stablecoin fees on request. Despite strong competition from chains like Base and Stripe’s Tempo, Solana continues to capture a significant share of x402 transactions, emerging as an early deployment layer for agent micropayments.

Trading infrastructure

Solana's high throughput has also attracted professional on-chain trading infrastructure. Proprietary AMMs (propAMMs) developed by professional market makers use private off-chain pricing models, functioning 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 settle on Solana, making them resistant 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, aiming to reduce block finality time from approximately 12 seconds to 100–150 milliseconds. Jito’s block assembly market enables dApps to autonomously control transaction ordering, supporting features like priority cancellation and enhancing execution fairness.

As block space expands and costs decrease, the core of competition in the public blockchain industry is shifting from cost to specialized division of labor. Major public chains leverage their architectural advantages to meet diverse use case requirements, while specialized chains like Hyperliquid, Canton, Arc, and Tempo optimize intensely for specific application needs, making clear trade-offs in permissioning, compliance, and execution design. The key question moving forward is: how will the industry landscape evolve when on-chain demand truly scales massively?

The entire on-chain infrastructure still faces shared risks. A paper by Google Quantum AI on March 31 indicated that the number of physical qubits required to break the elliptic curve cryptography underlying major blockchains like Bitcoin and Ethereum may be under 500,000—just one-twentieth of the previous estimate of 20 million. Early solutions such as Bitcoin BIP-360 and Ethereum’s post-quantum roadmap are already taking shape. A deeper challenge lies in coordinating community consensus and voluntary adoption within decentralized networks, a process that may be slower and less predictable than in centralized institutions.