Fees

In Proof of Work (PoW) systems like Bitcoin and the original Ethereum model, a significant cost is the fees paid to block miners. This cost inherent to the system serves as a protective measure against certain security threats.

However, PoW requires powerful hardware that consumes substantial amounts of energy, exacerbating the current energy crisis. It has also led to a kind of centralization, as most mining pools became controlled by single entities. Additionally, the fees limit the functionality of the blockchain, being too high to facilitate micropayments for dApps, trustless gameplay, and more.

These challenges prompted Ethereum to launch its Proof-of-Stake (PoS) blockchain in December 2020, with a full release in September 2022. PoS offers a more cost-effective model that also addresses specific security concerns.