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

The key question for the future is: as on-chain demand truly explodes at scale, how will the industry landscape evolve?

Written by: Tanay Ved, Coin Metrics

Translated by: Luffy, Foresight News

TL;DR

• As blockchain scalability increases and transaction costs fall, differentiation among public chains is shifting from cost competition to scenario-based specialized division of labor.
• 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 usefulness.
• Ethereum is solidifying its position as the on-chain liquidity and settlement center; L1 transaction fees hit a historic low, while L2 has evolved from a scalability solution into a specialized execution environment.
• Solana continues to advance its “internet capital markets” vision; payment adoption is rising, on-chain transaction infrastructure is maturing, and the Alpenglow upgrade target achieves sub-second finality.

As each network continues to expand block space, on-chain transaction costs are falling dramatically. After a recent upgrade, Ethereum mainnet fees dropped significantly; Solana’s transaction costs remain within a few cents, and L2 networks also offer similarly low-cost execution environments. Against the backdrop of continuously compressed costs, differences in block space are increasingly determined by ecosystem liquidity, throughput, and scenario specialization—not simply marginal cost advantages.

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

Bitcoin

In March 2026, the 20 millionth Bitcoin will be mined—meaning the remaining Bitcoin left to be issued will be only 1 million. More than 95% of Bitcoin’s total supply is already in circulation. After the halving in April 2024, 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 decline, the importance of transaction fees in miners’ revenue continues to rise. Excluding periods of temporary spikes, transaction fees account for less than 1% of miners’ total income. Because all Bitcoin transaction fees flow to miners, the long-term core question of its security model is whether naturally occurring fee demand can continuously fill the gap created by the decline in block rewards.

Making Bitcoin programmable and assetized

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

Most of Bitcoin’s funds remain idle. The vast majority of related activities and fee generation occur outside the main chain.

Bitcoin’s functional roles are evolving along two main lines: expanding underlying programmability and improving BTC’s asset utility. Sidechains, Lightning Network and other L2 solutions, wrapped BTC, and liquid staking protocols continue to enrich Bitcoin’s use cases—enhancing utility, but also introducing different levels of trust assumptions, ranging from fully custodial to smart contracts.

Market cap of wrapped Bitcoin; source: Coin Metrics

On the most minimal-trust 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, enabling EVM-compatible applications, and Bitcoin’s proof-of-work secures the system. Unlike sidechains, it completes settlement directly on Bitcoin via zero-knowledge proofs, while withdrawals rely on non-custodial bridges.

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

Ethereum

Ethereum remains the global hub for on-chain liquidity and settlement. It has about 62% of the total stablecoin market cap, possesses the deepest DeFi liquidity among all public chains, and is also an important distribution platform for tokenized real-world assets (RWA), covering money market funds, tokenized government bonds, stocks, and more.

Recent upgrades further strengthen Ethereum’s position as the core layer for economic activity. PeerDAS, a larger Blob space, and Gas limit increases enabled by upgrades such as Pectra and Fusaka push L1 fees down to multi-year lows, expanding the range of activities that can be directly settled on the mainnet.

Ethereum transaction volume and number of active addresses; data source: Coin Metrics

Ethereum’s daily active addresses and transaction volume are nearly doubling year-over-year, surpassing 1 million and 2.4 million respectively. But as we found earlier, some of the growth comes from address poisoning attacks and low-value economic activity addresses (transaction amounts below $1), which sometimes make up an extremely high share of daily active addresses.

The changing relationship between L1 and L2

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

According to a recent blog post from the Ethereum Foundation, L2’s core mission has turned into providing differentiated functionality, customization capabilities, and specialized execution environments, with scaling becoming only a secondary function.

Blob space utilization for submitting transaction data to Ethereum is under 30%; after scaling, there are on average about 3 Blobs per block. Blob usage is concentrated among a small number of L2s, and related fees are negligible as a share of total transaction fees. The rate at which L1 scales has already outpaced the settlement demand for L2. For most L2s, Ethereum settlement costs are no longer a barrier.

Average number of Blobs included per block on Ethereum; data source: Coin Metrics

The L2 networks that are truly seeing sustained growth are those with unique value: Base builds on distribution advantages enabled by Coinbase, and Arbitrum stands on deep DeFi liquidity. New-generation specialized public chains such as MegaETH, Lighter, Robinhood Chain, Ink, and others target specific scenarios, offering new business models and distribution channels.

Ethereum’s roadmap further drives deep integration between L1 and L2 through interoperability via native Rollups and minimal-trust architectures, reinforcing its role as the core hub for ecosystem liquidity and settlement.

Glamsterdam and other upgrades

The Glamsterdam upgrade plan is scheduled to go live in the first half of 2026 and will continue 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 construction into the protocol, reducing the centralization of MEV and improving transparency in transaction ordering. These changes are intended to make Ethereum L1 a more competitive execution environment, while maintaining its position as a trusted high-value settlement and DeFi platform.

Solana

Solana is moving away from the early label of “retail and Meme coin chains” and toward its vision of an internet capital markets. Transaction fees below 1 cent and block production time under 400 milliseconds make it a natural fit for high-frequency applications such as payments, micropayments, and high-frequency trading. This characteristic attracts a set of professional applications that require large-scale, low-latency execution.

Since the end of 2024, non-voting transactions on Solana have nearly doubled, reaching over 120 million per day on average.

Number of non-voting 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-level value transfers. Daily USDC transfers under $1,000 have stabilized at about 3 million, with the median transaction amount staying consistently below $100.

An emerging development is the x402 protocol—an open HTTP payment protocol introduced by Coinbase that allows any API or digital service to charge stablecoin fees on request. Despite fierce competition from chains like Base and Stripe’s Tempo, Solana still captures a large share of x402 transactions, becoming an early deployment layer for agent micropayments.

Transaction infrastructure

Solana’s high throughput also attracts professional on-chain transaction infrastructure. Proprietary AMMs (propAMMs) built by professional market makers use a private off-chain pricing model and feel 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, complete settlement on Solana, and have resistance to MEV.

Alpenglow and other upgrades

The upcoming infrastructure upgrade will further strengthen Solana’s advantages. Alpenglow replaces the existing consensus with Votor, a lightweight vote-aggregation protocol. The goal is to reduce block finality time from about 12 seconds to 100–150 milliseconds. The block assembly market built by Jito allows transaction applications to independently control transaction ordering, supports features like canceling priority, and improves execution fairness.

Conclusion

As block space expands and costs compress, the core of competition in the public chain industry is shifting from cost to specialized division of labor. Major public chains rely on their architectural strengths to meet diverse scenario demands; specialized chains such as Hyperliquid, Canton, Arc, and Tempo optimize to the extreme around application needs, making clear trade-offs in areas like permissioning, compliance, and execution design. The key question for the future is: when on-chain demand truly explodes at scale, how will the industry landscape evolve?

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