- The median transaction fees on the Ethereum blockchain have been above Bitcoin’s for over a month.
- Data aggregator Messari noted that an explosion of activities on Ethereum-backed decentralized finance and stablecoin projects shot its fees higher.
- It further stated the Ethereum’s consistent uptrend shows that its demand is not slowing down.
Ethereum has set a new record against Bitcoin.
The second-largest blockchain project by market capitalization charged higher fees for confirming blocks throughout the past 30 days. Its median transaction charge surpassed that of Bitcoin and stayed there for over a month, the most prolonged such period in Ethereum’s lifetime.
Ethereum fees stay at higher levels above its top rival Bitcoin. Source: Messari
A DeFi(nite) Rise
Data aggregator service Messari reported that the recent surge in Ethereum fees came in the wake of increased activity on decentralized finance (DeFi) and stablecoin projects (up by over 100 percent YTD). It said the “flippening” looked more utility-driven, adding:
“DeFi activity has exploded, partly driven by the fervor around “liquidity mining” and recent application upgrades (Uniswap v2, Kyber Katalyst).”
In a separate report, data analysis firm CoinMetrics plotted the activity of Ethereum’s top DeFi projects to measure its overall impact on its blockchain. It found that DeFi tokens Ox (ZRX) and Kyber Network (KNC) each witnessed an increase in the number of addresses.
Defi projects report an increase in the number of addresses. Source: CoinMetrics
CoinMetrics noted that KNC hit new all-time highs entering July ahead of its Katalyst and KyberDAO updates. The events will introduce new staking rewards, allowing KNC holders “to participate in protocol governance by staking their tokens while earning ETH rewards in return.”
It further highlighted a similar growth in the ZRX active addresses entering July. MKR addresses have declined since a peak in mid-June, but are still relatively elevated.
The uptick pointed to a more significant amount of transactional throughput across the ETH blockchain. It led miners to raise their gas limits by 25 percent back in June, thereby causing the fees per block to increase in tandem.
Lower Ethereum Adoption
The latest fees increase followed miners’ similar call nine months ago. A coordinated effort led to a 25 percent gas limit rally to aid the Ethereum network through the mass printing of Tether’s stablecoins USDT.
But Messari saw a glitch in the way Ethereum fees go up. The portal wrote in a Thursday note that it would cause UX problems while warding off new users. Meanwhile, it discussed the prospects of layer-2 solutions to limit the impact of higher ETH fees on the blockchain’s growth. Excerpts:
“All eyes will [now] be on the adoption of recently launched Layer-2 scaling solutions like OMG Network, Matic Network, and the various rollup iterations to alleviate an increase in fee price.”
The growth nonetheless served bullish cues to Ether that has surged by more than 80 percent YTD on DeFi and stablecoin adoption.
ETHUSD is up 165% from its mid-March lows. Source: TradingView.com
The ETH/USD exchange rate stands stuck below $250, now trading near $239.
Photo by Jens Johnsson on Unsplash