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Ether is now at an all-time high of over $1600. However, this increase is also accompanied by an explosion in transaction costs. Inflation is a joy for miners, but penalizes Ethereum blockchain applications.
In January, the Ether established a new ATH. For Ethereum miners, the surge in transactions, including on DeFi protocols, was a boon in terms of revenue. They received 830 million dollars in sales for the month, 40% of which was in fees.
The trend in February continues. It even intensifies with an ETH whose price now exceeds 1600 dollars. This situation does not contribute to a moderation of gas fees. Quite the contrary.
New records are also being set in this area. Over 24 hours, miners collected $27.75 million in fees alone. That’s four times more than on the Bitcoin blockchain, where activity is also significant.
But with an average transaction price of $23 per transaction according to Blockchair, Ethereum far outperforms Bitcoin in this sector. However, users of Ethereum, DeFi protocols and other Dapps can’t be happy about this.
Rising costs make the use of services like Uniswap more expensive. They have to charge higher fees, e.g. for swap transactions between tokens. For other tokens, based on Ethereum, including the DAI, the bill is also increasing.
Uniswap and TetherUSD alone spend about 30% of the total gas for Ethereum,” says Alexi Lane of Ethplorer at Decrypt. However, this activity and the associated costs are passed on to the entire sector.
In this situation, crypto actors decide to limit their operations. This is the case of the Japanese exchange Liquid. On February 4, it announced the end of ETH withdrawals and some ERC-20 tokens.
“The service will resume when gas charges return to normal levels. All other cryptocurrencies are operating normally,” said Liquid. On Twitter, crypto users are also testifying to the damage of an inflation of transaction fees.
However, according to Grayscale, this indicator can also be interpreted positively.
“We can see from the data that the price of Ether tends to move with the underlying network activity […] multiple measures reach new heights, including active addresses, hashrate, and network costs – a positive sign for investors. »