Average transaction fees on the Ethereum network are the highest in two years and have surpassed Bitcoin’s fees for the second time in the past three months.
Recently Coinbase researcher Max Bronstein tweeted the table below and suggested that the recent increase in commissions appears to be largely due to increased interaction with stablecoins on the Ethereum network.
Bitcoin and Ethereum transaction fee revenue. Source: Twitter
As Cointelegraph previously reported, Tethers Stablecoin USDT is the largest gas user on the network. According to the ETH gas station, around $ 2.56 million was spent on ether gas commissions last month. Stablecoin’s activity is undoubtedly one of the main reasons for the sudden surge in average ether transaction fees, but certainly not the only one.
USDT, DeFi and Ether lead to higher rates
Data from the ETH gas station show that USDT is the largest gas consumer within the network, followed by popular DeFi dapps such as Uniswap and Kyber Network. This shows that DeFi is also an extremely important factor in analyzing the increase in gas commissions.
As reported by Cointelegraph, gas consumption rose to a record high in May, but the number of transactions is not at its highest. This shows that the current activity comes not only from simple transactions such as USDT transfers, but also from complex intelligent contracts.
While the number of daily transactions is far from the all-time high of 1,349,890 transactions in January 2018, other parameters point to growing interest or at least to the movement of the ether itself (ETH).
Active care of the ETH in a period of 3 – 5 years. Source: glass knot
As shown in the diagrams above, the active ether supply is highest compared to ether units that have been moving in the last 3 to 5 years.
Further signs of growing interest in Altcoin can be seen in the derivatives market, where Ether’s open interest in options has grown at a truly phenomenal rate. Deribit’s open interest has increased by 315%, which is equivalent to around $ 158 million in the past two months, temporarily outstripping interest in Bitcoin (BTC) options.
What do rising commissions mean for Ethereum?
Growing interest and activity on the Ethereum network could trigger a bittersweet taste for blockchain fans. While this growth shows an increase in interactions with ether and dapps running on the Ethereum network, it also highlights the network’s growing technical debt.
Ethereum 2.0 will be released this summer and promises to solve today’s scalability problems with its fragmentation technology. However, it will take over a year for the new iteration of the blockchain to complete and the current blockchain to migrate to the new stakeout and fragmentation system.
Like Joseph Todaro, managing partner of Blocktown Capital, in a last tweet, These scalability issues can lead users and potential businesses from the Ethereum network to other smart contract platforms with better scalability solutions and less congestion.
As the investment continues to flow into Ethereum applications, the pressure for an effective and easy to implement solution will continue to increase. Solutions such as increasing the allowable total gas per block can help prevent overload. However, they will only solve the problem in the future and exacerbate some of the other network challenges, e.g. B. the increasing size of the blockchain.
Ethereum gas used daily. Source: Etherscan
Ironically, there is a remote way that The growing popularity of Ethereum is the Achilles’ Heel, and a large number of Ethereum supporters consider Ethereum 2.0 the solution that will solve all of the network’s problems.
There is also a possibility that Layer 2 solutions from third-party providers such as Matic, Skale Labs or other scalability solutions such as Plasma can solve these problems. But at this point, time and success or failure of Ethereum 2.0 will only show.