Bitcoin

Using a DeFi protocol now costs over $ 50 as Ethereum fees have skyrocketed

Ethereum gas prices hit new highs on Tuesday as it now requires an offer of more than 450 Gwei to complete a transaction. according to EthGasStation. Prices go up to 2 Gwei in doldrums and were previously considered high at 30 Gwei.

The gas price is a general indicator of average pricesHowever, it is not easy to translate it into real transaction costs. Since different types of transfers use different amounts of gas, There is a very significant difference between simple Ether (ETH) transfers and interacting with a DeFi smart contract.

Transferring Ether costs only about $ 4 at press timeThis is a far cry from Bitcoin (BTC) transfer rates of over $ 50 at the peak of the 2017 bull market. The token transfer is more expensive, costing around $ 17 for gas at press time. However, interacting with decentralized financial protocols has become so expensive that All users except the richest have no access to DeFi.

Using a DeFi protocol now costs over $ 50 as Ethereum fees have skyrocketed
Using a DeFi protocol now costs over $ 50 as Ethereum fees have skyrocketed

A simple Ether to Dai (DAI) exchange at Uniswap requires gas fees of $ 55. Curve estimates a price of USD 33 while An exchange at Mooniswap costs more than $ 80. It also takes approximately $ 57 to deliver an asset to Compound, while it takes $ 44 to deliver an asset to Aave.

With these gas prices, the use of these protocols becomes impossible or uneconomical. For the cost of gas on a DEX to be at a traditional exchange rate of 0.2%, assets of at least $ 27,500 must be traded in a single transaction. A user who puts 5,000 DAIs in Compound would have to wait more than 40 days to break even for gasoline, even if the COMP rewards are taken into account.

With all that said, Uniswap is breaking all volume records as it has traded more than USD 680 million in the last 24 hours. more than large centralized exchanges like Coinbase Pro. According to DappRadar, Uniswap has interacted with about 16,500 unique wallets with the protocol in the past 24 hours. That translates to an average transaction size per wallet of $ 41,000, which suggests that these gas charges are not a major concern for current Uniswap users. Some of the users are likely to use multiple wallets, which adds to the true average.

The pair with the highest volume on the exchange is SUSHI / ETH with around 140 million US dollars. By participating in the exchange, your liquidity providers can purchase the SushiSwap token, a direct code from Uniswap that aims to ensure a fair distribution of the tokens and causes one of the largest agricultural yield losses to date.

The yields in agriculture from the SUSHI token are currently between 1,000% and 3,000% on an annual basis or just under 1% daily. Interestingly, farmers seem to be primarily opting for the SUSHI / ETH fund, the only circular fund where SUSHI has to be bought first in order to earn it, even though its return at 2,000% is just “average”.

The likely reason is that it makes the rewards composition easier, since Farmers don’t have to constantly sell the SUSHI they receive in two separate tokens. Additionally, this promotes a Ponzi-like mechanism where new farmers increase the profits of existing participants by increasing the demand for the token.

It should be mentioned that Uniswap is now the largest gas user, according to EthGasStation, closely followed by Tether and the alleged Ponzi Forsage program.

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