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Blockchain transaction fee and Ethereum Merge

Author

Listed:
  • Jain, Archana
  • Jain, Chinmay
  • Krystyniak, Karolina

Abstract

We study the determinants of transaction fees in the Bitcoin and Ethereum blockchains, particularly focusing on the recent Merge – Ethereum's transition from a Proof-of-Work to a Proof-of-Stake consensus mechanism. Using multivariate regression analysis, we find that blockchain fees in USD increase with network congestion, measured by the mempool count, in a non-linear manner as hypothesized by Huberman et al. (2021). Additionally, the fees are positively influenced by the respective native currency's returns over the past six months. The Merge resulted in a fee reduction for both Bitcoin and Ethereum blockchains.

Suggested Citation

  • Jain, Archana & Jain, Chinmay & Krystyniak, Karolina, 2023. "Blockchain transaction fee and Ethereum Merge," Finance Research Letters, Elsevier, vol. 58(PC).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008796
    DOI: 10.1016/j.frl.2023.104507
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    More about this item

    Keywords

    Blockchain; Bitcoin; Transaction fees; Ethereum Merge; Proof-of-Stake;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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