ETH Fees Jumps Over 1,600% in 2020, Vitalik Says It Risks Making The Network ‘Less’ Secure
The price of Ether started pumping just this week after weeks of slow action. In 2020, so far, Ethereum has recorded gains of 110%. The digital asset has actually “broken out from its 50-day Bull Flag” to begin “a new uptrend.”
Unlike ETH price, which surged only to crash in March and then to start pumping to climb back to pre-crash levels, network fundamentals have been off the charts throughout 2020.
Average Ethereum transaction fees have skyrocketed to $1.42, up from $0.076 on January 1st, an increase of 1,768%. Median transaction fees started the year at $0.0375, which has jumped to $0.6676, a jump of 1,680%. This is the highest level since August 2018.
The same as fees, daily transactions have been rising in 2020, up from 466,526 on Jan. 1st to nearly 1.15 million a day, as per Etherscan. The last time this much activity was seen on the Ethereum network was during the peak of the bull run in January 2018.
At the current rate, it won’t be long before the network hits an all-time high of 1,349,890 transactions from January 4, 2018.
Transaction activity and fees are increasing to avoid congestion during busy times while pending transactions remain stable around 150k this week.
All of this means, “Transaction fee revenue is now nearing half as high as block reward revenue,” but Ethereum co-founder Vitalik Buterin also notes that “this actually risks making ethereum *less* secure.” As such, he called for market reform (i.e. EIP 1559), which fixes this.
Ethereum Network Usage Keeps on Growing
The Ethereum network is surely increasingly at use, as evident in the peaking daily gas usage. Gas usage has been hitting new high almost every other day, the latest one being 74,677 million, which has been remaining steadily above 70 billion since June 20.
As such, it's obvious that gas price would be increasing, currently at 81.5 Gwei, up 602% YTD from 11.6 Gwei earlier this year. The last time we were at this level was in July 2018 and before that in January 2018.
Ethereum fundamentals are on another trajectory this year, and it is all thanks to the massive increase in the stablecoin supply and the DeFi frenzy.
While USD-pegged digital assets have surpassed $12 billion in market cap in just four months, DeFi sees a record of $3.49 locked in it. Additionally, 4 million ETH are locked in Defi protocols, as per DeFi Pulse.
Weekly DEX volumes on Ethereum just casually breaking all time highs again 🚀
— Anthony Sassano | sassal.eth 👨🌾 (@sassal0x) July 22, 2020
And this makes the launch of ETH 2.0 all that much more urgent. Buterin tweeted that “Work on “the eth1 -> eth2 merge” is already happening.”
But Spartan Black of crypto hedge fund The Spartan Group argues that this won’t help to bring the gas fee down but also said it “is not ETH bearish in any sense.”
“Y’all know that Ethereum gas fees are not coming down right, even with L2? No, not in this DeFi driven, liquidity mining-crazed bull market, which is just getting started. We just have to get used to this reality,” he said.