Security Focus Instead of Low Fees: A Design Decision

1. Introduction: The Structure of Transaction Costs

The discussion around gas fees is a constant companion of Ethereum usage. Particularly for transactions with low volume, costs often bear no relation to utility. Despite the growth of dApps and DeFi, the question of Ethereum's economic viability for retail investors remains.

The technical reality is: Ethereum's architecture prioritizes security, decentralization, and integrity over low transaction costs. The network is not designed for competition solely on lowest fees, but for the secure settlement of complex financial applications. This positioning is a conscious strategic decision. The Mainnet is therefore structurally not designed for microtransactions.

2. Functionality of Gas Fees

Gas fees serve to compensate validators for the execution of transactions and smart contracts. Every operation in the network requires computational power, measured in "Gas Units". Costs are calculated from gas consumption multiplied by the current gas price, determined by supply and demand.

In phases of high network utilization, such as generic NFT mints or high DeFi trading volumes, gas prices rise significantly. With the upgrade EIP-1559, a mechanism was introduced that burns a "Base Fee" and optionally allows a "Priority Fee" (tip) for faster processing.

This dynamic pricing model secures the network against spam and guarantees processing according to economic urgency. High fees are therefore not a bug, but an integral part of the security model.

3. Priority on Security and Decentralization

The level of transaction fees correlates directly with the requirement for censorship resistance and decentralization. Thousands of independent nodes validate transactions globally, which precludes manipulation.

Alternative networks often achieve higher throughput rates and lower costs by making compromises on decentralization, for example through a lower number of validators. Ethereum does not pursue this approach. The distributed structure guarantees maximum resilience.

Fees reflect the costs for the computational power claimed. If these were too low, there would be a risk of network overload through spam transactions.

Users thus pay not only for the transaction itself but for security and finality in the network. This makes Ethereum the preferred infrastructure for value-critical applications.

4. Economic Protection Against Spam

Transaction fees function as an economic barrier against Denial-of-Service attacks (DoS). In networks with marginal fees, attackers can flood the system cost-effectively with transactions and thus impair functionality.

Ethereum's fee structure acts as a spam filter. Since every action incurs costs, inefficient or malicious activities become economically unattractive.

Through market-oriented pricing, the network remains stable even under load, as economically relevant transactions are prioritized. Without this mechanism, the integrity of the network would be compromised.

5. Comparison with Traditional Financial Systems

Compared to traditional banking systems, transaction costs on Ethereum, particularly for cross-border payments or asset trading, are often competitive.

International transfers via SWIFT often incur high fixed costs and currency losses with multi-day duration. Ethereum enables immediate settlement without intermediaries.

In an institutional context, transaction fees of, for example, 50 USD on a volume of 100,000 USD (0.05%) are negligible. The added value lies in transparency, immutability, and automated processing through Smart Contracts.

Ethereum offers, unlike centralized systems, complete sovereignty over assets. Layer-2 solutions additionally address the cost issue for small amounts.

6. Layer-2: The Solution for Micropayments

Scaling occurs increasingly via Layer-2 solutions (L2), which settle transactions cost-effectively without compromising Mainnet security. They operate "off-chain" or parallel to the main chain.

Technologies like Optimistic Rollups and zk-Rollups bundle transactions and validate them efficiently on the Mainnet.

Networks like Arbitrum, Optimism, or zkSync already offer significant cost advantages today. This enables the economic use of DeFi and other applications even for lower volumes.

L2s support complex smart contracts, enabling the migration of DEXs and Lending protocols. Future upgrades will further optimize the interaction between Layer-1 (Security/Settlement) and Layer-2 (Transactions).

7. Outlook: Scaling Without Compromise

The goal of Ethereum development is scaling while maintaining security and decentralization.

Layer-2 increasingly takes over the processing of user transactions, while Layer-1 acts as a secure settlement layer. Improved cross-layer communication will make interaction seamless.

Sharding, as a further upgrade, will increase Layer-1 capacity. Together with L2, a modular architecture emerges.

Ongoing optimizations (EIPs) aim for further efficiency increases. The integrity of the network remains the top priority. Ethereum positions itself not as the cheapest, but as the most robust platform for global financial applications.

8. Conclusion

Ethereum functions as a base layer for the future financial system, with a focus on transparency, decentralization, and trustworthiness.

Microtransactions are efficiently handled via Layer-2, while Layer-1 guarantees fundamental security.

This multi-layered model offers users sovereignty and security. The further development through L2, Sharding, and protocol updates consolidates Ethereum's position as a reliable infrastructure for digital finance.