The Ethereum network is reaching its limits. The high demand for ethers is increasingly clogging the network and causing transaction costs to skyrocket again.
Ether investors look at the current price with one laughing and one crying eye. The second-largest cryptocurrency has increased its share price by almost 50 percent in one week and, is, therefore, listed above the US $ 1,000 threshold for the first time in almost two years. With the height rush, however, the transaction fees in the Ethereum network rise again significantly.
With around 898,000 US dollars in transaction costs in just one day, the Ethereum fees have set a rather sad record from an investor’s point of view. So the current upward trend is ultimately expensive for ether investors. On average, according to bitinfocharts, currently around 0.018 Ether per transaction — at the current exchange rate just under 18 US dollars.
The rapid increase is due, on the one hand, to the constant high transaction frequency for months. As the following graphic shows, the throughput of transactions has risen continuously lately and has repeatedly sounded the performance capacities of the Ethereum network.
In addition, the demand for ether in the DeFi market is not falling. The increased integration into smart contract applications will, in turn, boost the fees. This interaction caused the gas fees to explode last autumn.
But one man’s joy is another man’s pain. While ether traders have to charge transactions with high fees in order to get them through the network, miners are in the fortunate position of first letting the “big fish” pass. According to Glassnode, transaction fees currently account for around 50 percent of total income for miners. As long as sharding functions and the proof-of-stake process remain a dream of the future, the fees in the Ethereum network are likely to shoot through the roof again and again. Only with the final version of Ethereum 2.0, these problems should finally be a thing of the past.
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Usury of fees at Ethereum was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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