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26 September 2023
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Ethereum’s Transaction Fee Shrinks 80% from ATH after Tether Switches to OMG

Trailing the crypto’s Big Daddy, Ethereum has put up a great show in the five years of its existence. Even as Bitcoin succumbed to the bearish pressure, Ether has succeeded in being the altcoins’ front runner. Investors were watchful of the value of the token as stablecoin continued to gain traction and DeFi frenzy.

This ride, for the underlying blockchain of the largest altcoin, has not been a smooth one. Network congestion has been one of the biggest issues that have crippled the network. However, there were signs that there could be a way out.

Shifting gear?

In a much-needed respite for Ethereum, transaction fees shrunk to almost 80% from its all-time high recorded on 22nd August, bringing back to levels last seen in mid-July. This was noted by the crypto-analytic firm Santiment which tweeted,

“This is a nice opportunity for significantly cheaper on-chain operations”

The Ethereum network was reported to be getting more and more congested. Taking up an enormous amount of space was the DeFi’s newbie Yield Farming. But it was not just the ecosystem of decentralized finance that was to blame. Tether, the world’s largest stablecoin has been consistently sitting on the list of top three Ethereum “gas guzzlers”.

Hence, the high growth of both DeFi, as well as stablecoins, has had a negative impact on the ETH network which witnessed the average transaction fee skyrocketing to an ATH breaking the previous records of the ICO boom of 2017.

Tether’s migration

Tether’s issuance has raised the eyebrows of many in the community. But what added to the current problem of congestion was when USDT’s issuance exceeded that of ETH on the Ethereum network.

In a bid to relieve pressure on the parent chain network, Tether entered into integration with the OmiseGO network, which happens to be the Layer 2 solution for Ethereum. With the stablecoin migrating to OMG Network for the settlement, it was expected to achieve a reduction of transaction fees and confirmation times.

However, days after the announcement, transaction fees fell which also coincided with the gas fees withdrawing considerably from its all-time high. Meanwhile, Gas usage was still hovering close to its ATH. This implied that despite the drop in transaction fee, the network is no mood of slowing down.

Good long-term signs of things to come

Ethereum was currently priced at $392. Even as it faced a minor correction, there were no signs of any sharp price movements on either side and was up by approximately 370% since the Black Thursday lows. And while a short-term bearish pressure did materialize, ETH was bullish with respect to the macro trend since its transaction count stood firm near its ATH, which has provided fundamental support for its current price action.

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