Ethereum transaction fees are skyrocketing. They are expected to break the record of $ 722 million in May.
The cost of transactions on Ethereum is a recurring concern. Their high level has an impact on activity, especially on DeFi. In fact, this is the main argument for Ethereum’s competitors, such as Cardano, to encourage migration.
In May, these fees are off to a new high. According to figures from Coin Metrics, they are expected to largely supplant the previous ATH, however, by $ 722 million. If the trend continues, which can no longer be taken for granted …
$ 1.7 billion ETH in transaction fees
Thus, the transaction fees could by the end of May exceed the total amount of network revenue for the entire first quarter. This figure would flirt with $ 1.7 billion in ETH by the end of the month.
There are currently many reasons to increase the bill. These fees apply to all transactions made on Ethereum. This can be a transfer of funds as well as an auction on an NFT.
And the more the public blockchain is used for transactions, the more congestion increases. With this saturation, it is the costs of operations on Ethereum that skyrocket. The development of the NFT and DeFi markets is already a factor of congestion.
The historic value of ETH is also attracting a growing number of investors. Over the past few weeks, Ether has been crossing the $ 3,000 and then $ 4,000 milestones in succession. The cryptoasset has since fallen sharply to around $ 3,400 on May 18, however.
ETH plummets, and fees plunge
But Ethereum is not designed to accommodate such a colossal volume of transactions, however. This is the reason why the fees are skyrocketing, but also at the origin of the migration to ETH 2.0 and Proof Of Stake.
This changeover will take time, however. To alleviate the congestion, Ethereum developers are therefore planning network updates. In July, “London” will thus automate gas prices in order to contain them.
The miners look down on their face, however, they who are the primary beneficiaries. However, other events can contribute to the reduction of costs. The solution is far from enviable for investors, however.
Indeed, due to the sharp decline in the price of cryptocurrencies, fees are currently in free fall. According to Bitinfocharts, the average cost fell in a few days from nearly $ 70 to $ 20. At the same time, ETH was losing 27% of its value.