There was a moment, not long ago, when a rising gas fee on Ethereum was celebrated like a victory lap. Every spike was parsed as 'network demand,' every costly swap as proof of value. Investors pointed to fee revenue as if it were a profit-and-loss statement for the chain itself. But the truth, as Ripple CTO David Schwartz recently reminded us, is that high fees are not a sign of health—they are a symptom of inefficiency. And in a market that has spent years conflating price with purpose, this is more than a technical correction; it is a moral one.
Schwartz, the architect behind the XRP Ledger, publicly dismantled the idea that expensive transactions automatically translate into a healthier network. His statement was brief but devastating—a quiet act of intellectual honesty in an industry built on hype. For those who have watched the rise of Layer 1s that intentionally design for scarcity of block space, his words land like a cold bucket of reality. We have allowed a narrative to flourish where congestion is seen as a feature, not a bug. Schwartz calls for a redefinition: a healthy network does not price out its users; it scales to include them.
To understand why this matters, we must go back to the fundamentals of what a blockchain is supposed to be. At its core, a decentralized network is a public utility—a shared resource for value transfer, data storage, or computation. The ideal is accessibility: anyone, anywhere, should be able to participate without being gated by cost. But somewhere along the line, the crypto community began to treat transaction fees as a proxy for value capture. High fees meant high demand, which meant a 'winning' network. This logic is seductive because it is simple, but it is also deeply flawed. It ignores the fact that fees are a tax on usage, and a tax that rises with demand is a regressive one, disproportionately excluding users with lower economic power.
Schwartz is not the first to point this out, but he is one of the few with the technical authority to make it stick. As the creator of the XRP Ledger, he has spent over a decade building a network that prioritizes low-cost, fast settlements—fractions of a cent per transaction. For him, the metric of health is not fee revenue but throughput, decentralization of validators, and real-world adoption. When a network becomes so expensive that only whales can afford to use it, it ceases to be a permissionless system. It becomes an exclusive club, sanitized of the very ethos that gave birth to Bitcoin.
Let’s examine the data. During the peak of the 2021 bull run, Ethereum’s average transaction fee surged past $70. This was celebrated by some analysts as evidence of robust economic activity. But what it actually revealed was structural inadequacy: a network that could not handle its own success. Users were pushed to sidechains and rollups, and the L1 itself became a playground for high-value DeFi transactions, leaving retail investors stranded. Meanwhile, XRP Ledger processed millions of transactions with fees under a penny. If health is measured by fee revenue, Ethereum was a giant. But if health is measured by accessibility and utility, XRP Ledger was far more effective at fulfilling the core promise of blockchain—democratizing finance.
This is the central insight: a network's value is not proportional to its cost of use. It is proportional to the value it delivers per unit of cost. High fees are not a feature; they are a failure of scaling. They indicate that the network’s architecture is not aligned with its mission. And yet, the industry rewards failure because it creates short-term price narratives. We have built a market that confuses pain with progress.
But let me be contrarian here—not to undermine Schwartz, but to test his claim against the practical realities of blockchain economics. There is a legitimate argument that high fees can signal genuine demand, especially in a proof-of-work system like Bitcoin, where fees ultimately compensate miners for security. If Bitcoin’s fees are low, miners may become unprofitable, potentially centralizing hashrate. In this narrow context, fees do play a role in network health—they are the lifeblood of security budget. However, Schwartz’s point is about the metric itself, not about absolute fees. He argues that a network should not rely on high fees as a primary health indicator. Instead, the ideal is a system where fees remain low despite high usage, achieved through efficiency improvements (like sharding, layer 2s, or superior consensus mechanisms). The real measure is the ratio: fee per unit of value transfer. If a network can settle $1 billion in value for $0.01, that is healthier than one that settles the same value for $70. The former shows genuine scaling; the latter reveals artificial bottlenecks.
This is where Schwartz’s background in applied mathematics shines through. He understands that a network’s health must be a multivariate function—not a single variable. We need to consider transaction confirmation times, censorship resistance, validator diversity, and user adoption. Fee revenue alone is a vanity metric, like judging a library by its overdue fines.
The contrarian twist: there is a small subset of investors and protocols that benefit from high fees. Layer 1s with token burn mechanisms (like Ethereum’s EIP-1559) see high fees as a way to reduce circulating supply, potentially boosting token price. For them, acknowledging that high fees are unhealthy undermines their value proposition. This creates a perverse incentive: they must sustain a narrative that congestion is good. Schwartz’s statement is thus a direct threat to that narrative. It shines a light on the uncomfortable truth that many projects are not designed for efficiency but for scarcity—artificially limiting block space to drive fee revenue. In doing so, they betray the original vision of permissionless access.
From a values perspective, I am drawn to Schwartz’s stance because it aligns with the ideal that technology should serve people, not the other way around. As an INFP and a evangelist of decentralization, I have always believed that blockchain’s greatest contribution is not financial speculation but the creation of public infrastructure that is equitable and accessible. When I audit a protocol, I ask: does this system prioritize the user at the margins? Or does it extract value from them? High fees are a form of extraction, penalizing the very activity that gives the network life. A healthy network should treat its users as participants, not as revenue sources.
My own experience in the 2020 DeFi summer exposed me to the power of low-cost, transparent systems. I watched as MakerDAO and Uniswap flourished because their fees were—at least initially—manageable. But soon, congestion drove costs up, and the user base narrowed. Those who stayed were the ones with capital to spare. The community became less diverse, more exclusive. That was not a sign of success; it was a failure of scalability. Schwartz’s words echo that lesson: we must design for abundance, not scarcity.
So where does this leave us? The market loves simple stories, and ‘high fees = healthy network’ is a simple story. But it is also a dangerous one. As we move into a bull market where euphoria often masks technical flaws, investors need to look beyond fee figures. They should ask: is this network efficient? Is it decentralized? Does it allow the poorest user to transact with dignity? If the answer to any of these is no, then high fees are not a badge of honor—they are a warning sign.
The future of blockchain lies not in expensive, congestion-prone chains, but in networks that scale gracefully, keeping fees low even as adoption explodes. That is the vision that XRP, Solana (with its low fees before outages), and next-generation L2s are chasing. Schwartz has simply reminded us that the yardstick we used to measure health is broken. It is time to find a new one—one that measures freedom, not friction.