The numbers surged, but the room felt empty. For much of 2021, Ethereum’s gas fees hit all-time highs, and the chorus of celebration was loud. Projects boasted of their TVL, their fee revenue, their supposed ‘network value.’ Yet beneath the surface, a quieter truth was forming—one that Ripple CTO David Schwartz recently articulated with surgical precision: high fees do not automatically translate to a healthier network. This isn’t a new insight, but it’s one that the market, in its collective amnesia, keeps forgetting. As someone who spent years building infrastructure at Gitcoin and watching DeFi Summer’s liquidity mining frenzy, I’ve seen the damage this misconception can do.
When Schwartz spoke, he was not attacking Ethereum or any specific chain. He was correcting a cognitive bias that has distorted how we measure success in crypto. The idea that expensive transactions equal high demand, and high demand equals a valuable network, is a relic from the early days when the only networks were Bitcoin and Ethereum, and fees were a proxy for usage. But in today’s multi-chain world, that equation is not only wrong—it’s dangerous. It leads projects to optimize for fee generation rather than genuine adoption, and it misleads investors into valuing noise over substance.
Context: The Fee Fallacy
To understand why this matters, we need to step back. In 2017, during the ICO boom, Ethereum’s gas fees spiked to levels that made even simple token transfers cost tens of dollars. At the time, many called it a sign of success—‘See, everyone wants to use Ethereum!’ But what they missed was the toll on real users. I was at Gitcoin then, manually auditing quadratic voting contracts for public goods funding. We saw first-hand how high fees excluded small contributors. A $20 gas fee to cast a vote that might only be worth $2? That’s not health—that’s a barrier.
Schwartz’s point is grounded in the philosophy of XRP Ledger, which has maintained fees at fractions of a cent since its inception. XRP processes transactions in seconds with near-zero cost, and its proponents argue that this is the true sign of a healthy network: low friction that enables global payments. But the narrative of ‘high fees = high value’ persists, partly because it fuels speculative interest. When a new L1 launches with a hyped-up ‘fee market,’ traders rush in, betting that rising fees will push the token price higher. It’s a self-fulfilling prophecy—until it isn’t.
Core: What Actually Measures Network Health
Based on my experience auditing over 50 smart contracts during the Gitcoin days, I learned to look beyond surface metrics. A healthy decentralized network is not defined by how much users pay to use it, but by how many users can use it effectively and how resilient its infrastructure is. Let me break down the real indicators:
First, transaction throughput and finality. A network that can handle thousands of transactions per second with low latency is inherently more capable of supporting real-world applications. Solana, for example, processes over 2,000 TPS regularly, but its fees are typically under $0.01. That’s a sign of efficient scaling. In contrast, Ethereum’s base layer, even after EIP-1559, often sees fees of $5–$50 for simple swaps, yet its TPS is limited to ~15. That’s a bottleneck, not a badge of honor.
Second, decentralization. A healthy network must resist control by a small group of validators. The Nakamoto coefficient—the smallest number of entities needed to collude and halt the network—is a critical metric. Bitcoin and Ethereum score relatively high (thousands of nodes), while many fast, low-fee chains like Solana or BSC have far fewer validators. But here’s the nuance: a network can have low fees and high decentralization (like XRP Ledger, which has over 100 validators distributed geographically) or high fees and low decentralization (like some fragmented L2s). Fragmentation itself is a cost.
Third, real user activity, not just price or volume. In 2020, when Uniswap v2 launched liquidity mining, I was the Senior PM overseeing the program. I watched as protocols scrambled to offer high APY—often funded by inflation—and saw TVL spike 10x in days. But when incentives ended, users left. The fees generated during those weeks were high, but the network’s health was a mirage. We were paying for attention, not building sticky utility. Today, many layer-2s face the same trap: they boast about fee revenue but ignore that most volume comes from bots and arbitrage, not everyday users.
Fourth, value settled vs. fee extracted. A network that enables massive value transfer while keeping fees low is more efficient. Bitcoin processes billions in value daily with fees that are a tiny fraction of the transferred amount. That’s healthy. In contrast, a network that takes 1% of every transaction in fees might generate high revenue, but it’s parasitic on its users. I recall during the Terra/Luna collapse in 2022, the Anchor protocol was offering 20% APY on deposits, and the chain’s fees were artificially low to support that model. The result was a catastrophic unwind. The network’s fee structure wasn’t sustainable because it was subsidized by an algorithmic token that had no real demand.
When the graph spikes, the soul remains quiet. High fees often accompany hype cycles, but they also correlate with user suffering. In my work as a technical advisor for the Bitcoin ETF regulatory bridge in 2025, I spent weeks explaining to policy makers that network health isn’t about fee revenue—it’s about the ability to maintain security, accessibility, and decentralization under stress. That’s why Bitcoin, despite its relatively high fees during bull runs (compared to its history), remains the gold standard: its fee market is demand-driven, but its base layer is designed to be simple and secure. The fee isn’t the feature; the stability is.
Contrarian Angle: When High Fees Do Matter
I don’t want to swing the pendulum too far. There are scenarios where rising fees are a useful signal. For example, if a network suddenly sees a surge in fees due to organic demand from new dApps or user growth, it indicates that people are willing to pay for block space. This was the case with Ethereum’s NFT boom in 2021—high fees reflected genuine excitement from a new audience. But even then, the network wasn’t healthy; it was congested. The high fees were a symptom of scaling limits, not a measure of value. The truly healthy response would have been to deploy L2 solutions faster, not to celebrate the fee explosion.
Another counterpoint: some argue that low fees can be a sign of low demand. A network with consistently zero fees, like many dormant chains, is clearly not healthy. So there’s a U-shaped curve—extremely low fees with no activity is bad, moderately low fees with high activity is ideal, and extremely high fees with high activity is unsustainable. Schwartz’s statement targets the misconception that we should celebrate the right side of the curve. The goal is to stay in the middle: fees that cover security costs but don’t exclude average users.
I’ve also seen projects intentionally keep fees low by centralizing infrastructure (e.g., using a single sequencer). That’s not healthy either. As an ethical infrastructure builder, I believe low fees must be achieved through scalable architecture (sharding, rollups, efficient consensus) not by sacrificing security or decentralization. The L2 space is littered with examples of projects that claimed low fees but had single points of failure. When those cracks show, the user cost isn’t measured in fees but in lost assets.
Takeaway: The Metric We Need
The industry is maturing, and we must retire the lazy shorthand of ‘high fees = success.’ As builders and investors, we should demand a composite health index: one that weighs throughput, decentralization, user retention, and fee efficiency. Imagine a metric that divides total value settled by total fees paid—call it ‘value efficiency.’ A chain that settles $1 billion with $1 million in fees (0.1%) is healthier than one that settles $1 billion with $10 million in fees (1%). The latter is capturing more revenue, but the former is more useful.
Ripple CTO’s quiet correction is a call to refocus. The next bull run will bring new chains that boast of fee spikes. Remember: the graph is a tool, not a talisman. When the numbers rise, ask not how much users are paying—ask how many users are staying. The soul of a network isn’t its fee revenue; it’s the trust and utility it provides without asking for a pound of flesh. Let’s build that.