Ethereum gas fees hit a level seen 5 times in the last 4 years; why?
The average gas fees on Ethereum blockchain has hit a level not seen in a long time. The average gas fees, at the time of writing, was just below 200. However, as per ETH gas station, for fast transaction confirmations, the gwei required is 200 and for a standard confirmation, it is 196.
Why is this happening?
Well, if you are not aware by now, DeFi ecosystem’s yield farming is the new hype.
With a new DeFi platform launching every other day promising huge returns, the hype around the DeFi ecosystem has surged. In this frenzy for yield farming, Yam seems to be the most popular platform at press time.
Considering the total assets locked in DeFi, which has surged from $600 million in April to a little under $5 billion, shows the interest and involvement in DeFi.
The craziest part about Yam is not yield farming or the exponential rise in prices of YAM tokens, but the fact that it was launched on Tuesday at 7:00 UTC and a little over 24 hours later, the total assets locked on Yam platform has hit $343 million.
Out of which, WETH holds the highest portion of $11 million, followed by LINK token at $76 million and YFI at 62 million.
All of this, for an unaudited platform. While DeFi has had its fair share of hacks, the users seem to just ignore this fact.
Congestion and gas fees
With this fanfare around DeFi and a new yield farming platform coming up every day, the ETH network seems to be getting more congested. Already taking up a vast size of the network is the stablecoin Tether and a few other scams. However, with DeFi, this has caused the network to hit 96% congestion, a level last seen during the peak of the bull run in 2018.
With the network being congested, the transactions need to be prioritized. Hence, the average gas price, as of August 11, hit 130 gwei and as of writing, it is at ~200 gwei. A gas level of 200 gwei was seen 5 times in the last ~4 years and today is one of those days.