Bitcoin transaction fees play second fiddle to Friend.tech — How?

• Fees generated by Friend.tech surpassed Bitcoin with almost a $3 million difference.
• Activity on the Bitcoin network decreased.

According to Token Terminal, Bitcoin [BTC] transaction fees were no match for the decentralized social network Friend.tech. From Token’s Terminal data, Friend.tech fees in the last 30 days were worth $26.8 million. Bitcoin, on the other hand, made fees worth $24.2 million.

🤯@friendtech just surpassed bitcoin in 30d fees pic.twitter.com/gPLwfXLOyQ

— Token Terminal (@tokenterminal) October 5, 2023

Is access better than mining?

The difference in fees between the social network and the largest crypto by market value highlights the rising adoption of the platform where users can buy shares or keys of other users. On the Friend.tech platform, users who register get their own channel, and participants have to own at least one share or key to access a certain user’s channels.

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So, when someone buys a channel key, 5% of the fees goes to Friend.tech. Then, another 5% goes to the channel owner. Also, a surge in shares buying makes fees more expensive, So, users pay more to access a “trending” channel while paying more.

This is a totally different method from the way Bitcoin generates fees. Typically, Bitcoin transaction fees are determined by the data volume of transactions and demand for block space. 

In this instance, miners receive transaction fees when a new block has been validated, supporting the profitability of mining.  For the Lightning Network, transaction fees are set by node operators and can vary from node to node.

Friend.tech’s surge in fees has also left a positive impact on its revenue. With a total of 323,262 unique traders, the network’s revenue has increased to $19.39 million.

Source: Dune Analytics

Lately, Friend.tech rising activity also affected the Total Value Locked (TVL) as it crossed the $50 million mark. The TVL is a measure of the trust users have in a protocol. This is done by evaluating the smart contract depositing coming into the said protocol.

Bitcoin’s unconfirmed transaction reduces

Therefore, the hike in the network’s protocol means that trust for interacting on Friend.tech had increased. Meanwhile, Bitcoin’s inability to override Friend.tech’s fees could be linked to activity on its mempool.

A mempool is also known as a  contraction of memory and pool. As a waiting room for transactions that have not yet been included in a block, the mempool is used for storing information on unconfirmed transactions.

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According to Glassnode, Bitcoin’s mempool total fees were down to 0.68. This means that there isn’t a long list of unconfirmed transactions on the blockchain. This could also be a sign of low network activity on Bitcoin.

Source: Glassnode