Transaction fees in the Ethereum network have recently reached a new record per hour. According to Glassnode, a chain analysis company, miners on the network earned over $500,000 in just one hour today while Ether (ETH) recovered.
Currently at its 2020 high of $486, Ether was up 10% today. The increase in network activity is believed to be related to the launch of Sushiswap, a branch of Uniswap that has reached $1 billion in total blocked value in less than 24 hours.
The news may sound good for Ether’s miners, whose revenues are increasing with higher rates and more transactions. In fact, the hash rate of the Ethereum network has been growing steadily, having recently peaked at 20 months, despite recent controversy over a proposal to reduce block rewards by 75%.
The DeFi bubble continues to grow rapidly, according to data from a Twitter analyst
However, it points to a growing problem in the short and long term sustainability of Ethereum. While DeFi seems to be giving rise to a renewed upward trend for Ether, it also seems to be the main cause of her technical problems.
As the DeFi sector continues to drive activity beyond the network’s boundaries, network congestion leads to a greater number of unconfirmed transactions, longer wait times and higher rates as users compete to have their transactions confirmed faster. This problem also makes some smart contracts virtually unusable, an extremely crucial issue for the future of Ethereum as a smart contract platform.
While USDT has consistently spent the most gas on the network, the decentralized exchange and liquidity protocol, Uniswap, recently overtook Tether as the most resource-intensive smart contract.
Uniswap also made waves in the media, as it surpassed Coinbase in daily trading volume, showing how big DeFi is getting in the digital asset space.
Using a DeFi protocol now costs more than $50, as Ethereum fees have skyrocketed
Transaction costs remain a major issue in crypto space
Ethereum has had constant problems with high rates and congestion. Recently, the network increased the maximum gas limit per block from 10,000,000 to 12,500,000 gas, but it is not the only network whose rates have increased.
Bitcoin has also had a substantial increase in the price of transaction fees from less than a dollar in July to $3.53 at the time of writing. The network saw a peak on August 6 at $6.47 per average transaction.
However, these fees are still somewhat inconsequential for large transactions, as exemplified by one user who paid less than $5 to transfer more than $1 billion in Bitcoin. However, when it comes to small payments, the current rates (in both Ethereum and Bitcoin) are simply unbearable. The nature of the Immediate Edge transaction fees has become one of the main arguments for classifying Bitcoin as a kind of „digital gold“ instead of a currency.
While transaction fees have been a constant problem for Ethereum, there are some solutions in place, including an old Ethereum enhancement proposal (EIP), EIP 1559, which is now being tested on Filecoin, a decentralized file sharing and payment protocol. The proposal has been successful in improving the fee structure of the platform and, in theory, could also be applied to Ethereum.