The L2 That Now Out-Earns Its Own L1
Polygon has crossed a milestone that seemed improbable even six months ago: the Layer 2 network is now generating more in daily transaction fees than Ethereum itself. As of February 17, Polygon's daily fees have surpassed $300,000, flipping Ethereum's daily fee total according to Token Terminal data cited by Cointelegraph.
This is not a one-day anomaly driven by a memecoin frenzy or an NFT mint. Polygon's fee trajectory has been building for months, fueled by sustained stablecoin activity, micropayment volume, and a series of infrastructure upgrades that raised the network's throughput ceiling without requiring hard forks. The fee flip is the revenue-side confirmation of what the chain's transaction data has been signaling since late 2025: Polygon is no longer just cheap Ethereum overflow. It is becoming its own economic engine.
How Polygon's Fee Revenue Doubled in Weeks
The climb to $300K daily fees tracks directly to the chain's explosive growth in real-world transaction volume. Polygon processed 94 million stablecoin transfers in a single day on February 10, leading all major chains in stablecoin throughput. The network's stablecoin supply has swelled to over $3 billion, supported by 5.2 million active stablecoin addresses.
Weekly fees hit $1.1 million in January, the highest level since November 2024. Since then, the trajectory has only steepened. Over the prior three months, daily fees and revenue surged 425%, climbing from roughly $27K daily to the $300K+ mark reported today.
The drivers are concrete: Polymarket alone holds $258 million in total value locked on Polygon, generating high-frequency bet settlement transactions. Stablecoin payments, particularly USDC transfers for merchant settlements and remittances, account for another significant chunk. And the Dandeli upgrade in December 2025 unlocked dynamic gas limit adjustments, allowing validators to raise the block gas limit to 90 million without a hard fork.
More transactions at slightly higher per-transaction fees (still well under $0.01) equals fee revenue growth. Polygon's approach has been volume-driven: keep individual costs trivially low so that the sheer number of transactions generates meaningful aggregate revenue.
Why Flipping Ethereum on Fees Is a Bigger Deal Than TVL
Total value locked gets most of the attention in chain-vs-chain comparisons. Ethereum still dominates TVL at $218 billion versus Polygon's $57 billion. But fee revenue tells a different story, one about actual usage rather than parked capital.
A chain can have massive TVL from yield-farming deposits that sit dormant. Fee revenue, by contrast, requires active transactions. Every dollar in Polygon's $300K daily haul represents someone sending a stablecoin, settling a prediction market position, executing a swap, or interacting with a smart contract. It is a more honest measure of economic activity than TVL.
Ethereum's fee decline is the other half of this equation. The shift to a rollup-centric roadmap has been working as intended: base layer fees have dropped as activity migrates to L2s. But the unintended consequence is that Ethereum's own fee revenue, and by extension its burn rate under EIP-1559, has weakened. Polygon flipping Ethereum on fees is both a Polygon success story and an Ethereum design choice playing out in real time.
For POL token holders, the fee flip has direct tokenomic implications. Polygon burns base fees, and the network has been destroying roughly 1 million POL per day. On January 5, the network recorded its largest single-day burn in history at 3 million POL. At current rates, approximately 3.5% of POL's total supply could be burned annually, creating deflationary pressure that did not exist a year ago.
What This Means for Polygon Users and Card Holders
Polygon's fee dominance has practical implications for anyone using the chain for payments. The network hosts several crypto card programs that rely on on-chain settlement, and low fees are the baseline requirement.
Gnosis Pay, for example, uses Gnosis Chain for settlement but the broader self-custody card ecosystem increasingly touches Polygon for stablecoin top-ups and bridging. Cards that accept USDC or USDT deposits frequently route through Polygon because individual transaction costs remain under a penny even as aggregate fee revenue climbs.
The key nuance: Polygon generating $300K in daily fees does not mean individual users are paying more. The average transaction still costs a fraction of a cent. The fee total is driven by volume (millions of daily transactions) rather than per-transaction cost. This is the ideal outcome for payment-focused chains: the network monetizes at scale without pricing out everyday users.
For holders of stablecoin-friendly cards, Polygon's growth reinforces the chain as a reliable settlement layer. More fee revenue means more validator incentive to secure the network. More stablecoin volume means deeper liquidity for on-ramps and off-ramps. The flywheel is spinning.
The Ethereum Fee Paradox and What Comes Next
Ethereum's position in this story is paradoxically both a success and a vulnerability. The rollup-centric roadmap explicitly aimed to push execution off the base layer and onto L2s like Polygon, Arbitrum, Base, and Optimism. By that measure, the plan is working perfectly. Fees are low on L1 because activity has migrated.
But fee revenue funds Ethereum's security budget. Lower fees mean less ETH burned, which weakens the deflationary narrative that has been central to Ethereum's investment thesis since The Merge. If L2s consistently generate more fee revenue than L1, the question becomes whether Ethereum's base layer is being subsidized by its own children.
Polygon is not the only L2 growing aggressively. Base has accumulated $4.9 billion in TVL, and the newly launched Unichain has already reached $1.16 billion. The competition for L2 fee revenue is intensifying, which makes Polygon's current lead notable but not guaranteed.
For now, though, the data point speaks for itself. An L2 is out-earning its own L1 on daily transaction fees. That has not happened before in crypto's history with networks of this scale, and it reshapes how we think about where value accrues in modular blockchain architectures.
FAQ
Does this mean Polygon is more valuable than Ethereum? No. Fee revenue is one metric among many. Ethereum still dominates in TVL ($218B vs $57B), developer activity, and DeFi liquidity. The fee flip reflects Polygon's superior transaction volume at low per-unit cost, not an overall valuation shift.
Will Polygon fees increase for users? Unlikely in the near term. Polygon's model is volume-driven: sub-penny transaction costs multiplied by millions of daily transactions. The Dandeli upgrade allows dynamic gas limit increases to prevent congestion-driven fee spikes. Individual users should continue to pay fractions of a cent per transaction.
What is driving Polygon's fee growth? Three primary factors: stablecoin transfer volume (94M transfers in a single day on February 10), Polymarket activity ($258M TVL generating high-frequency settlements), and the gas limit increase to 90M that expanded throughput to 2,100+ TPS without requiring a hard fork.
How does this affect the POL token? Polygon burns base fees, destroying roughly 1 million POL daily. Higher fee revenue accelerates this burn, creating deflationary pressure. The January 5 burn of 3 million POL in a single day was the largest in the network's history.
Overview
Polygon has flipped Ethereum in daily transaction fees for the first time, crossing $300,000 according to Token Terminal data. The milestone caps months of accelerating growth driven by record stablecoin volume, Polymarket activity, and infrastructure upgrades that raised throughput to 2,100+ TPS. While Ethereum still leads in TVL and overall ecosystem value, the fee flip signals that real transaction activity is increasingly concentrating on Layer 2 networks. For Polygon's POL token, the fee growth translates directly into accelerated burns and deflationary pressure. For crypto card users and stablecoin holders, Polygon's fee revenue milestone reinforces the chain's viability as a settlement layer that can monetize at scale without raising per-transaction costs.
Recommended Reading
- Polygon Pushes Its Gas Limit to 90M as the Chain Quietly Crosses 2,100 TPS on Its March Toward Gigagas
- Crypto Funds Bleed for a Fourth Straight Week as $3.7 Billion Exits, but Europe and Altcoins Tell a Different Story
- Ethereum Hits 10 Years of 100 Percent Uptime, a Reliability Record No Other Layer 1 Can Match
