Bitcoin network transaction fees have plummeted by over 80% since April, according to a report from Galaxy Digital. As of August 2025, nearly 15% of blocks are being mined with minimal or no transaction fees, utilizing just one satoshi per virtual byte or less.
While lower Bitcoin (BTC) transaction fees are advantageous for users, they adversely impact miners’ revenue, sparking concerns regarding the long-term sustainability of the network’s security model.
Bitcoin’s incentive system depends on miners receiving compensation for their efforts via block rewards and transaction fees. However, with the April 2024 halving reducing rewards to 3.125 BTC per block, miners are increasingly reliant on the fee market, which is diminishing.
“As block rewards decrease, transaction fees become more significant,” stated Pierre Samaties, chief business officer at the Dfinity Foundation, in an interview with Cointelegraph. “If usage doesn’t increase, that base thins, and the guarantees weaken. Sustained throughput is crucial for the system’s defense.”
Related: Bitcoin 2025 builders predict DeFi will unseat traditional finance
Bitcoin onchain activity declines
The onchain activity of Bitcoin has seen a considerable slowdown following the decline of non-monetary trends such as Ordinals and Runes. Galaxy’s report notes that OP_RETURN transactions, which were heavily utilized during the 2024 Ordinals boom, now represent just 20% of daily volume, down from over 60% at their peak.
Meanwhile, alternative layer 1s like Solana are gaining popularity for high-frequency applications like memecoins and NFTs. Additionally, the emergence of spot Bitcoin ETFs, which currently hold over 1.3 million BTC, has shifted more BTC volume offchain, limiting transactions that would typically generate fees.
Bitcoin’s fee market is inherently elastic, meaning fees increase when demand rises and decrease when activity slows. However, if demand continues to decline, miners may not have sufficient incentives to secure the network. Galaxy pointed out that nearly 50% of recent blocks have been underutilized, and mempool activity remains tepid.
Amidst this scenario, a new opportunity is surfacing in the form of BTCfi, Bitcoin-native DeFi. Unlike DeFi platforms on Ethereum or Solana, which rely on smart contracts from those networks, BTCfi utilizes Bitcoin as the base asset while constructing financial applications such as lending, trading, and yield generation on layers or protocols that interact directly with the Bitcoin network.
“Every action in BTCfi necessitates moving Bitcoin,” explained Samaties. “Movement drives computation, computation consumes block space, and space incurs costs.” In essence, as BTCfi expands, so does onchain activity and fee revenue.
Related: The future of DeFi isn’t on Ethereum — it’s on Bitcoin
From digital gold to financial primitive
Samaties pointed out that Bitcoin has historically been considered “digital gold,” serving more as a store of value than a functional asset. However, he envisions it evolving into a more fundamental component: a financial primitive.
“A financial primitive serves as a building block for developers to create various flows, tools, and logic,” he remarked. “In that capacity, Bitcoin transcends the role of a mere asset, becoming a programmable element within broader financial architectures.”
Julian Mezger, chief marketing officer of Liquidium, also mentioned that infrastructure advancements are paving the way for transformation. “The past five years have revolutionized Bitcoin’s framework from a simple settlement layer to a complex ecosystem,” he noted. “We are now witnessing the groundwork for true Bitcoin-native DeFi being established.”
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