On-chain data shows that 31,700 ethereum (ETH) have been burned in the last week.
The spike is due to the latest pepecoin (PEPE) mania. This development has further raised the transaction costs of Ethereum.
Earlier this week, the average daily gas price rose to a 12-month high of 87 gwei, equivalent to one billionth of an ether (ETH).
The frog behind gas rates
Pepe coin (PEPE) is a frog-themed token that has gained immense popularity in the cryptocurrency sector, experiencing a notable increase in value in recent days. This has drawn a lot of attention from investors looking to take advantage of the latest cryptocurrency craze.
In just one week, the PEPE token has gained an incredible 665% while in the last two weeks it has increased by 585%.
The popularity of the PEPE token is reflected in its trading volume, which has surpassed that of wrapped bitcoin (WBTC) and USDT, a stablecoin, on Uniswap, reaching an impressive $150 million in just 24 hours.
Additionally, the PEPE token has made its way into the top 100 largest cryptocurrencies by market capitalization, with a valuation of over $500 million as of May 1.
As more investors flock to PEPE, its value has continued to rise, reaching an impressive market value of $879 million in the last trading session.
a hard fork
The fear of missing out (FOMO) meme coin is believed to be the reason why gas fees on Ethereum are rising rapidly.
As of May 4, transaction fees on Ethereum increased to over $15. While the average cost of gasoline on Ethereum ranged from $50 to $70 in 2021, transaction costs fell rapidly during the crypto winter of 2022 only to start rising this year.
In 2021, Ethereum upgraded via EIP-1559, which resulted in a portion of all Ethereum transactions being burned. As network activity increases, more ETH is destroyed, making the currency deflationary.
Despite EIP-1559 and the revision of the gas fee system on Ethereum, transaction fees continue to rise.
As a result, there has been a corresponding increase in gas fees on layer 2 platforms such as Arbitrum and Optimism.
