Ethereum Transaction Fees Hit May 2022 Highs, What This Means For ETH?

0 0

Ethereum transaction fees are once again hitting highs last seen since May 2022. This development has raised concerns about the impact on the Ethereum network usage and its native cryptocurrency, ETH.

Ethereum, the second-largest crypto by market capitalization, is one of the leading decentralized finance (DeFi) and non-fungible tokens (NFTs) platforms. The network has been experiencing a surge in activity due to the increasing popularity of memecoins such as PEPE, which has caused fees to spike.

Rising Transaction Fees: A Cause For Concern

On May 2, the median average transaction fee on the Ethereum network soared to around 87 gwei, according to Dune Analytics. This spike was mainly attributed to the increased on-chain activity surrounding memecoin trading, according to Hildobby, a pseudonymous data researcher at VC firm Dragonfly.

Ethereum daily median gas price.

knife

Memecoins such as Pepe the Frog-themed token have been enjoying a renaissance recently, with the token price soaring over 266 times in just four days in April. The memecoin’s market cap rose to over $500 million this week before crashing below $400 million again.

While this surge in activity may indicate increasing interest in the crypto market, it also highlights concerns about the network’s scalability and the impact of rising fees on users. High transaction fees can deter users from interacting with decentralized applications on the Ethereum network; as the fees increase, smaller users are priced out of the platform and its applications. 

Notably, the rise in memecoin trading activity, which increased the number of transactions on the Ethereum network, leading to a surge in fees, has also made decentralized exchanges (DEXs) on Ethereum experience the highest level of users since 2021. 

Dune Analytics data shows that Ethereum-based DEXs saw a surge in volume, with the total trading volume on these platforms surpassing $63 billion in April alone. This represents a significant increase from March, when the total trading volume was around $31 billion.

What This Means For ETH

It is worth noting that the rising transaction fees on the Ethereum network are seen as a disadvantage to the value of ETH, as users may seek alternative blockchains with lower transaction costs. An instance of this is the increasing interest in other L1 blockchains such as Solana (SOL), Cardano (ADA), Fantom (FTM), and so on.

However, Ethereum co-founder Vitalik Buterin recently suggested that the network could quickly scale up to 100,000 transactions per second. This could help alleviate network scalability concerns and reduce transaction fees.

Regardless, the increased activity may be a positive sign of growing interest in the crypto market; but it has an expensive price tagged. The rise in fees could discourage smaller transactions and lead to a decline in demand for ETH. 

Wwith Ethereum’s scalability improvements in the pipeline, it remains to be seen how the network will evolve in the coming months. Meanwhile, ETH price has declined 0.4% after a potential surge to trade above $2,000, last month.

Ethereum (ETH) price chart on TradingView

ETH currently trades for $1.872 at the time of writing. ETH has a 24-low of $1,855 and a 24-high of $1,919, according to data from CoinMarketCap. Regardless of the market decline, the asset’s trading volume has only ranged between $8 billion and $9 billion in the past two weeks.

Featured image from Shutterstock, Chart from TradingView

Leave A Reply

Your email address will not be published.

bitcoin
Bitcoin (BTC) $ 26,951.22
ethereum
Ethereum (ETH) $ 1,884.52
tether
Tether (USDT) $ 1.00
bnb
BNB (BNB) $ 305.24
usd-coin
USD Coin (USDC) $ 1.00
xrp
XRP (XRP) $ 0.515193
staked-ether
Lido Staked Ether (STETH) $ 1,882.98
cardano
Cardano (ADA) $ 0.373929
dogecoin
Dogecoin (DOGE) $ 0.071998
solana
Solana (SOL) $ 21.05
matic-network
Polygon (MATIC) $ 0.898789
tron
TRON (TRX) $ 0.076469
litecoin
Litecoin (LTC) $ 93.39
polkadot
Polkadot (DOT) $ 5.23
binance-usd
Binance USD (BUSD) $ 1.00
shiba-inu
Shiba Inu (SHIB) $ 0.000008
avalanche-2
Avalanche (AVAX) $ 14.38
dai
Dai (DAI) $ 1.00
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 26,989.23
uniswap
Uniswap (UNI) $ 5.04
leo-token
LEO Token (LEO) $ 3.59
chainlink
Chainlink (LINK) $ 6.38
cosmos
Cosmos Hub (ATOM) $ 10.54
okb
OKB (OKB) $ 46.05
monero
Monero (XMR) $ 146.31
ethereum-classic
Ethereum Classic (ETC) $ 17.97
the-open-network
Toncoin (TON) $ 1.73
stellar
Stellar (XLM) $ 0.091744
bitcoin-cash
Bitcoin Cash (BCH) $ 113.81
filecoin
Filecoin (FIL) $ 4.89
internet-computer
Internet Computer (ICP) $ 4.76
true-usd
TrueUSD (TUSD) $ 1.00
lido-dao
Lido DAO (LDO) $ 2.28
aptos
Aptos (APT) $ 9.00
quant-network
Quant (QNT) $ 118.49
hedera-hashgraph
Hedera (HBAR) $ 0.050495
arbitrum
Arbitrum (ARB) $ 1.23
crypto-com-chain
Cronos (CRO) $ 0.05932
near
NEAR Protocol (NEAR) $ 1.59
vechain
VeChain (VET) $ 0.019856
the-graph
The Graph (GRT) $ 0.131515
apecoin
ApeCoin (APE) $ 3.11
algorand
Algorand (ALGO) $ 0.150478
the-sandbox
The Sandbox (SAND) $ 0.559699
paxos-standard
Pax Dollar (USDP) $ 1.00
frax
Frax (FRAX) $ 0.998057
edgecoin-2
Edgecoin (EDGT) $ 1.00
eos
EOS (EOS) $ 0.900351
elrond-erd-2
MultiversX (EGLD) $ 37.52
rocket-pool
Rocket Pool (RPL) $ 49.23
render-token
Render (RNDR) $ 2.58
optimism
Optimism (OP) $ 1.42
aave
Aave (AAVE) $ 63.73
fantom
Fantom (FTM) $ 0.318647
decentraland
Decentraland (MANA) $ 0.480591
theta-token
Theta Network (THETA) $ 0.852515
blockstack
Stacks (STX) $ 0.610234
tezos
Tezos (XTZ) $ 0.901344
rocket-pool-eth
Rocket Pool ETH (RETH) $ 2,022.95
axie-infinity
Axie Infinity (AXS) $ 7.01
immutable-x
ImmutableX (IMX) $ 0.764141
flow
Flow (FLOW) $ 0.728438
havven
Synthetix Network (SNX) $ 2.36
usdd
USDD (USDD) $ 1.00
bitdao
BitDAO (BIT) $ 0.501264
neo
NEO (NEO) $ 10.33
gala
GALA (GALA) $ 0.02999
kucoin-shares
KuCoin (KCS) $ 7.36
whitebit
WhiteBIT Token (WBT) $ 4.90
radix
Radix (XRD) $ 0.068416
curve-dao-token
Curve DAO (CRV) $ 0.843499
bitget-token
Bitget Token (BGB) $ 0.470338
injective-protocol
Injective (INJ) $ 7.91
bitcoin-sv
Bitcoin SV (BSV) $ 32.41
gatechain-token
Gate (GT) $ 4.34
maker
Maker (MKR) $ 662.36
conflux-token
Conflux (CFX) $ 0.284592
gemini-dollar
Gemini Dollar (GUSD) $ 1.00
klay-token
Klaytn (KLAY) $ 0.184768
bittorrent
BitTorrent (BTT) $ 0.00000058415651
kava
Kava (KAVA) $ 1.00
iota
IOTA (MIOTA) $ 0.197886
chiliz
Chiliz (CHZ) $ 0.101454
pepe
Pepe (PEPE) $ 0.000001
casper-network
Casper Network (CSPR) $ 0.046954
pax-gold
PAX Gold (PAXG) $ 1,969.47
tokenize-xchange
Tokenize Xchange (TKX) $ 6.34
sui
Sui (SUI) $ 0.945427
terra-luna
Terra Luna Classic (LUNC) $ 0.000085
xdce-crowd-sale
XDC Network (XDC) $ 0.035909
compound-ether
cETH (CETH) $ 37.79
mina-protocol
Mina Protocol (MINA) $ 0.536288
tether-gold
Tether Gold (XAUT) $ 1,963.84
gmx
GMX (GMX) $ 55.22
huobi-token
Huobi (HT) $ 2.97
frax-share
Frax Share (FXS) $ 6.59
dash
Dash (DASH) $ 42.15
ecash
eCash (XEC) $ 0.000024
trust-wallet-token
Trust Wallet (TWT) $ 1.07
frax-ether
Frax Ether (FRXETH) $ 1,883.00