Report is the same for all, transaction fees on the Ethereum network reach never met summits. For several weeks, small transferts have been almost impossible to make if your wallet is not well stocked.
Since beginning of the year, the use of Ethereum network has literally exploded, in particular by the numerous decentralized finance projects (DeFi) and a growing demand for stable corners such as Tether in the form of ERC-20 tokens.
What is DeFi?
Decentralized finance aims to recreate the current financial system, while eliminating trusted intermediaries such as banks.
It is a direct application of blockchain technology and uses mostly the Ethereum network. Its objective is to allow transmission of value and to create a finance for all without intermediaries.
Several million « ethers » are thus collateralized (blocked) in the DeFi for a value of several hundred million dollars in the last few months.
We can clearly see on this graph comparing the number of tokens blocked in DeFi compared to Bitcoin and Ethereum that DeFi takes more and more space.
For example, the Uniswap Decentralized Exchange (DEX) has reached a daily trading volume of 1 billion dollars and has become one of the leading protocols of decentralized finance (DeFi).
Why exorbitant gas on Ethereum?
The explosion of DeFi leads to an ever-increasing number of transactions on Ethereum network. As a direct consequence, network congestion becomes inevitable.
To issue a transaction on Ethereum, you have to pay a transaction fee called "Gas". The user has possibility to increase or reduce this Gas. This opération increases transaction speed and faster acceptance by minors.
This fierce competition between users has seen the Gas rise to levels never recorded since Ethereum creation. In addition, the miners have recently agreed to increase the limit from 10,000,000 to 12,000,000 gas.
The gas price has thus been multiplied by ten since the beginning of 2020, even twenty times during the periods of highest activity.
For several weeks, fees have ranged from $0.8 to more than $14 for a single transaction. In other words, for a small transfer, you don't have much left at the end.
Evolution over the last 3 months of Ethereum's average transaction fees - Source : Blockchair.com
Several answers but no solutions.
The observation is the same everywhere, the transfers of ether or token ERC-20 has become almost impossible at reasonable price whatever the platform.
Moreover, transfer fees are much higher when you transfer ERC-20 tokens than pure ether. A reason?
Several players in the blockchain have reacted quickly to avoid the exorbitant transaction fees.
Uphold reviewed its payment policy with network fees below 100 BAT.
A hard blow for Brave browser that uses this platform to pay contents creators.
Publish0x, a blogging platform, had to suspend all payments this week and increase the minimum payment several times. One paiement per month, see more : https://www.publish0x.com/publish0x-official-blog/publish0x-payout-schedule-switched-from-weekly-to-monthly-xpjevvz
The Binance founder, Changpeng Zhao, commented this problem :
"The high ETH network gas fees is causing problems for most exchanges, running with $10-20 loss on each withdrawal. Will have to adjust our withdrawal fees sooner or later."
And after ?
Have we reached limits of Ethereum network and will there be a return to normal?
Will users turn away from Ethereum and look for other solutions?
Ethereum 2.0 is struggling to get its head above water but many are skeptical about its ability to solve a such problem.
One thing is sure, we become HOLDr in spite of ourselves because we can't transfer our precious crypto. Let's hope that this is enough to decongest Ethereum network.
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