The other side of the coin: Usurious fees for Ethereum (ETH)
The Ethereum network is reaching its limits. The high demand for Ether is increasingly clogging up the network and causing transaction costs to shoot through the roof once again.
Ether investors are looking at the current price action with one eye laughing and one eye crying. The second-largest cryptocurrency has risen by almost 50 per cent in one week and is now BinBot trading above the 1,000 US dollar threshold for the first time in almost two years. However, along with the highs, the transaction fees in the Ethereum network are also increasing significantly.
With around 898,000 US dollars in transaction costs in just one day, Ethereum fees have set a rather sad record from an investor’s point of view. So the current upward trend is ultimately costing Ether investors dearly. On average, according to bitinfocharts, each transaction currently costs around 0.018 Ether – just under 18 US dollars at the current exchange rate.
The rapid increase is due, on the one hand, to the consistently high transaction frequency for months. As the chart below shows, the throughput of transactions has risen steadily recently, repeatedly exhausting the performance capacities of the Ethereum network.
In addition, Ether demand in the DeFi market is not abating
Increased inclusion in smart contract applications is in turn boosting fees. This interplay already caused gas fees to explode last autumn.
But one man’s joy is another man’s sorrow. While Ether traders have to charge transactions high fees to get them through the network, miners are in the fortunate position of letting the „big fish“ pass first. Transaction fees, for example, currently account for around 50 per cent of total revenue for miners, according to Glassnode. As long as sharding functions and the proof-of-stake procedure remain dreams of the future, the fees in the Ethereum network are likely to keep shooting through the roof. Only with the final version of Ethereum 2.0 should these problems finally be a thing of the past.