Try Quests to earn cryptoPolygon Fees
Polygon is one the first Ethereum sidechains. It was created to address Ethereum's scalability issues. Compared to Mainnet, Polygon enables more transactions while collecting lower fees.
In this Dashboard, I examine how Polygon fees are related to other variables.
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1 - Fees on Polygon vs Fees on Ethereum Mainnet
Could it be that when transaction fees on Mainnet increase, activity (and fees) on Polygon also increase? This seems plausible if transactions migrate from Mainnet to Polygon as gas fees on Mainnet increase.
Let’s test this hypothesis by observing the average transaction fee on Polygon and on Mainnet. The average fee is calculated hourly and denominated in USD.
This line chart shows the average hourly fee (in USD) collected on both Polygon and Ethereum Mainnet. The period of observation is from June 6 to July 6, 2022.
It is difficult to see any correlation between the variables on a line chart. A scatter plot is better suited for that.
When two variables are correlated, they show a distinct pattern on a scatter plot.
It would seem that as transaction fees on Mainnet increase, transaction fees on Polygon also increase.
The CORR function of SQL provides the correlation coefficient between the variables. A coefficient approaching 1 indicates a perfect correlation, while a coefficient of 0 shows no association between the variables.
There is a weak but real correlation between transaction costs on Ethereum Mainnet and Polygon. We can speculate that this is because activity migrates from Mainnet to Polygon as the cost of transactions on Ethereum increase. Alternatively, it could be that the prices of ETH and MATIC move in sync. As the prices of these two assets increase, the transaction fees (in USD) of both networks may also increase.
Transactions fees are calculated hourly. The average hourly price of MATIC and ETH are used to convert fees to USD amounts.
Using data from June 1 to July 7, I show the average transaction fee on Polygon against the price of ETH. Both variables are measured on a hourly basis and denominated in USD.
The scatter plot shows no obvious pattern between the variables. This is indicative of low (or no) correlation.
From June 1 to July 7, 2022, there was no association between the price of ETH and the average transaction fee on Polygon.
When shown a scatter plot, it would seem that as the number of transactions on Polygon increase, the average transaction fee also increases.
There is a moderate correlation between the total hourly number of transactions and the average transaction fee on Polygon.
The period of observation is from June 6 to July 8, 2022.
The scatter plot shows no obvious pattern. The hourly transaction count on Ethereum does not seem to be associated with the average fee on Polygon.
Fun fact: On the x-axis, we see that Ethereum rarely processes more than 50,000 transactions per hour. If we look back at the previous scatter plot, we see that Polygon often processes from 100,000 to 200,000 transactions per hour. The higher capacity of Polygon is an important explanation for the lower transactions fees of the sidechain.
There is no association between the hourly number of transactions on Ethereum and the average transaction fee on Polygon.
What Have We Learned?
The strongest association was between the number of transactions on Polygon and the average transaction fee on Polygon. This is expected. When the network becomes congested, the cost to validate transactions also rises.
Transaction fees on Ethereum and on Polygon are also somewhat correlated (r = 0.19). It is possible that activity (and therefore fees) on both network are mostly in sync. This makes sense because Polygon is EVM compatible, meaning that most Ethereum applications can also run on Polygon. Another factor may also contribute to this correlation: if the prices of MATIC and ETH track each other closely, then the USD fee to transact on either network will also move in lockstep.
The number of transactions on Ethereum and the average fee on Polygon have no correlation. Similarly, there is no link between the price of ETH and the average fee on Polygon.
Thank you for reading!
Technical Notes:
In all cases, the data is measured on an hourly basis. The average fee is always expressed in USD.
It would be interesting to repeat this experiment when Ethereum transaction fees are higher and more volatile.