ūüĒóBlockchain Fundamentals - Fee Ratio Multiple by Cryptorhythms

ūüĒóBlockchain Fundamentals - Fee Ratio Multiple by Cryptorhythms


Back with the next indicator in the Blockchain Fundamentals Series! Hope everyone is enjoying using these as much as I enjoyed porting them to tradingview. This one is not a buy / sell signal, but useful none the less. Created by Matteo Leibowitz.


Fee Ratio Multiple ( FRM ), which seeks to measure the transaction fee revenue growth required for dis-inflationary Proof of Work chains to maintain existing security levels once block rewards are fully phased out. A high FRM suggests that a network will have to maintain inflationary block rewards in order to sustain security, whilst a low FRM suggests that a network can maintain existing security levels while simultaneously achieving low inflation . The latter outcome is arguably more desirable for a long term Store of Value and protection against inflationary government-controlled currencies.

FRM is explicitly about security, which should be considered the foundational layer of the chain stack. By looking at FRM we can deduce how secure chains will be once block rewards disappear. Further, FRM implicitly measures the strength of an assets properties as a Store of Value.

A low FRM suggests that an asset can maintain its current security budget (miner revenue) without having to rely on an inflationary subsidy.

Conversely, a high FRM suggests that an asset will require heavy inflation via block reward subsidies in order to maintain its existing security budget.

I suggest everyone read the article here for further clarification on what this indicator means and how to use it:

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