In recent weeks, the Ethereum community has been dealing with a problem that many users are concerned about: the rapid increase in gas consumption on the network.
Gas fees are charged for processing transactions on the Ethereum blockchain, and they have increased at an alarming rate.
Ethereum gas fee hits a 12-month high
According data dune, shared by data scientist hildoby, The median price of ETH gas, measured in gwei and averaged over seven days, rose to 87, a level not seen in the last 12 months, since May 2022. The average transaction fee is now around $50, a Significant increase from just a few months ago when it was less than $10.
High gas fees have caused frustration among users, who are finding it increasingly expensive to carry out even simple transactions on the network. Many small-scale users such as decentralized application (dApp) developers, traders, and retail investors find it difficult to participate in the Ethereum ecosystem due to the high cost of gas fees.
try buying an NFT of ~$20 worth of eth, and gas is ~$40.
some people say that infrastructure operators deserve to be paid. sure, but the image pays a $40 visa fee to buy a $20 digital good… the infrastructure should be affordable. pic.twitter.com/5L4SYjT5af—0xMQQ (@0xMQQ) April 18, 2023
Return of Memecoins
The problem is mainly due to the increasing demand for transaction processing on the network, as memecoins return to the market after being silent for almost two years. In recent weeks, memecoin trading has gained momentum and most trading activities take place on the Ethereum blockchain.
One such memecoin is PEPE, whose market capitalization increased more than 100 times in the last two weeks after its launch in mid-April. Other memecoins that have seen a lot of buzz in recent weeks include ArbDogeAI, WOJAK, and SHIBAI.
Another possible reason for the high ETH gas fee is the resurgence of NFT trading on the Ethereum blockchain. While such volumes dropped significantly in April, perhaps due to the memecoin renaissance, reports revealed that they reached $4.7 billion in Q1 2023, up 137% from a year earlier.
Additionally, data from blockchain intelligence platform Glassnode revealed that gas consumption from NFT-related activities on Ethereum increased by 94% between January and February.
The way to follow
The Ethereum community is actively working on solutions to address the issue, including the implementation of the Ethereum Improvement Proposal (EIP) 4844. This proposal aims to reduce gas fees and transaction throughput by introducing a new transaction type that accepts “blobs” of data.
Meanwhile, users have been forced to adjust their strategies, with some choosing to trade off-peak when gas rates are typically lower. Others have been switching to alternative blockchain networks that offer lower fees or opting for Layer 2 scaling solutions like Polygon to lower the cost of transactions.
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