Blockchain transaction fee and Ethereum Merge

Archana Jain, Chinmay Jain and Karolina Krystyniak

Finance Research Letters, 2023, vol. 58, issue PC

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.

Keywords: Blockchain; Bitcoin; Transaction fees; Ethereum Merge; Proof-of-Stake (search for similar items in EconPapers)
JEL-codes: G10 G14 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008796

DOI: 10.1016/j.frl.2023.104507

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