Crypto Fees for On-Chain Analysis 

What Are Fees in Crypto?

In simple terms, fees are what users pay to use a blockchain. Every action on a network, whether it’s sending tokens, swapping assets, or interacting with a smart contract, requires a transaction. And every transaction comes with a cost.

This cost, known as a network or transaction fee, is typically paid in the blockchain’s native token, like BTC on Bitcoin or ETH on Ethereum. These fees are paid to the network’s miners or validators, who verify and secure transactions. On some blockchains, a portion of these fees is also routed to the protocol’s treasury or even burned, reducing the total supply.

Fees are not just a cost, they’re a signal. They tell us that users are finding the protocol useful enough to pay for access. Which is why, for fundamental analysis, fees are one of the most important metrics to track.

Why Crypto Fees Matter?

Fees reflect real economic activity. Price can move because of speculation or sentiment, but fees only grow if people are using the protocol.

When fees rise consistently over time, it’s usually because:

• More users are interacting with the blockchain
• The demand for block space is increasing
• The protocol is offering something useful enough to pay for

Unlike TVL or token price, fees are much harder to inflate. You can’t fake demand if nobody’s using the network. That’s why growing fees are often a sign that a protocol is reaching product-market fit.

At the same time, fee trends can also help identify saturation. If fees are growing too fast while usage stays flat, it might signal congestion or poor scalability.

How to Interpret Crypto Fees?

Here’s how to make sense of the metric:

• Fees going up + users increasing → Strong organic demand
• Fees going up + users flat → Network congestion or rising cost of access
• Fees stable + users rising → Improved scalability or better throughput
• Fees falling → Potential slowdown in usage or seasonal drop in activity

Fees also tie directly to other financial metrics like protocol revenue and earnings. Not all fees are retained by the protocol. Some go to validators or are burned, but growing fee volumes usually support stronger fundamentals over time.