2020-8-19 19:42 |
Average Ether transaction fees skyrocketed to $7.3 on August 13, as per Ycharts. The total daily transaction fees on the network topped at $6.87 million, eclipsing the previous all-time high of $4.55 million in January 2018. The next day, this record was broken to hit $8.61 million.
These astronomically high fees were the result of YAM mania. The distribution of YAM tokens through staking pools, the higher the stakes, the more the tokens earned, created a rush as reflected in the more than $15k worth of transaction fees generated by YAM staking pool smart contracts within hours of launch.
As we reported, a bug in rebase function disturbed the whole set up and required 35k YAM to fix the issue. Again this rush to move YAM caused fees to skyrocket.
Source: CoinMetricsSuch speculations, reminiscent of 2017’s ICO mania, lead to “unexpected risk and sudden surges in fees.”
While this means high demand for usage, high fees also cause network congestion and price out certain users. Coin Metrics noted,
“High fees make it less and less profitable for retail investors to put relatively small amounts into DeFi applications. DeFi is increasingly a game for whales, unless there are solutions to help drive fees down.”
In its latest report, Coin Metrics points out how it is becoming “harder for average, retail users to compete with large, whale investors who can afford to pay high transaction fees,” on Ethereum.
When mining a block, Ethereum miners select which transactions to include which are typically sorted by the highest fee as such “relatively low fees get deprioritized and included in later blocks once there’s space.”
Increasing the gas, a unit to measure Ethereum fees, increases the chances of a transaction getting included. And higher fees lead to higher revenue for miners.
As such, as average transaction fees in Ethereum increases, certain types of users and applications, especially those with microtransactions, get priced out, making it skewed towards whales at the expense of small, retail users.
Ethereum (ETH) Live Price 1 ETH/USD =$404.7103 change ~ -4.42%Coin Market Cap
$45.36 Billion24 Hour Volume
$2.92 Billion24 Hour VWAP
$41524 Hour Change
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