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28 March 2024
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Ethereum

Ether surges, but transaction fees break records

Ether is now at an all-time high of over $ 1,600. However, with this increase comes an explosion in the cost of transactions. Inflation makes miners happy, but penalizes Ethereum blockchain applications.

In January, Ether was establishing a new ATH. For Ethereum miners, the surge in transactions, including on DeFi protocols, represented a revenue boon. They collected $ 830 million in sales over the month, 40% of which were fees.

The trend in February continues. It escalates even with an ETH now priced above $ 1,600. This situation in no way contributes to a moderation of costs (gas fees). Quite the contrary.

23 dollars in fees per transaction: a loss

In this area too, new records are being set. Over 24 hours, the miners collected $ 27.75 million from fees alone. This is four times more than on the blockchain Bitcoin, where activity is important there too.

But with an average price per transaction of $ 23 according to Blockchair, Ethereum far outperforms Bitcoin in this sector. However, users of Ethereum, DeFi protocols and other Dapps cannot rejoice in such a situation.

The increased fees make it more expensive to use services like Uniswap. They must indeed charge more substantial fees, for example on swap transactions between tokens. For other tokens, based on Ethereum, including the DAI, the bill is also growing.

Uniswap and TetherUSD alone spend about 30% of total gas on Ethereum, Ethplorer’s Alexi Lane tells Decrypt. This activity, and the associated costs, however, spill over into the industry as a whole.

A positive sign for investors

In this situation, crypto players decide to limit their operations. This is the case with the Japanese exchange Liquid. On February 4, he announced the end of withdrawals fromETH and some ERC-20 tokens.

“Service will resume when gas charges return to normal levels. All other cryptocurrencies work normally ”, specified Liquid. On Twitter, crypto users testify they too from the prejudice of an inflation of transaction costs.

However, according to Grayscale, this indicator can also be interpreted positively.

“We can observe from the data that the price of Ether tends to move with the underlying activity on the network (…) multiple metrics are reaching new heights, including active addresses, hashrate and fees. network – a positive sign for investors. ”

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