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Ethereum’s Median Fee Hit a 4-Month Low, while Address Activity Soaring to a 7-Month High

Despite making significant strides in 2021, high gas fees in the Ethereum (ETH) network have been a big headache.

Nevertheless, users have a sigh of relief because Ethereum’s median fees have dropped to $5.50 per transaction from highs of $34.18 last month. On-chain metrics provider Santiment confirmed:

“Ethereum’s median fees have quietly come back down to an affordable $5.50 per transaction. This is a far cry from the $34.18 per transaction level that the ETH network was demanding near its AllTimeHigh just one month ago.”

This drop-in fee has been advantageous in pushing Ethereum’s utility levels based on high address activity. Santiment added:

“With ETH fees coming back to earth rapidly with this December price correction, address activity has soared to 7-month high levels. Utility of Ethereum is far more appealing to traders with fees back down to $5.50 per transaction.”

Ethereum has made notable steps this year, given that more money has flowed into its network compared to Bitcoin. This has been boosted by a couple of use cases like ETH being the backbone of the booming decentralized finance (DeFi) and non-fungible tokens (NFTs) sectors.

Furthermore, Ethereum recently showed better performance in annual returns than Bitcoin, with a 663% gain.

Ethereum 2.0 continues to scale the heights

According to crypto analytic firm Glassnode:

“The total value in the ETH 2.0 Deposit Contract just reached an ATH of 8,599,010 ETH.”

Ethereum 2.0, also known as the Beacon Chain, was launched in December 2020 and was regarded as a game-changer that sought to transit the current proof-of-work (POW) consensus mechanism to a proof-of-stake (POS) framework.

The POS algorithm allows the confirmation of blocks to be more energy-efficient and requires validators to stake Ether instead of solving a cryptographic puzzle. As a result, it is touted to be more environmentally friendly and cost-effective. ETH 2.0 is also expected to improve scalability through sharding.

Ethereum Fees Have Grown 10-Fold Since Q4 2020, Showing High Demand and Willingness to Pay

High gas fees have grappled the Ethereum network throughout 2021, given that it has increased by ten times since the fourth quarter of last year.

Market insight provider IntoTheBlock explained:

“For better or worse, the amount paid to use Ethereum has skyrocketed in 2021. The total amount of ETH paid in fees has grown by over 10 times from $430M in Q4 2020 to $4.8B so far in Q4 2021. Such fees highlight the high demand and willingness to pay to use the Ethereum blockchain.”

IntoTheBlock acknowledged that high demand was driving the fees upwards, and despite this, users were still willing to pay to utilize the ETH network.

Users recently got a sigh of relief because Ethereum’s median fees dropped to $5.50 per transaction from highs of $34.18 last month.

The amount settled on the Ethereum has tripled

IntoTheBlock added that Ethereum showcased itself as an engine of economic activity based on high transaction volume.

“Ethereum becomes an engine of economic activity. The total volume processed just between ETH and stablecoins has been consistently high in 2021. The total amount of value settled on Ethereum has tripled relative to Q4 2020, and increased five-fold versus Q4 2017.”

This correlates with the fact that more money has flowed into the Ethereum network compared to Bitcoin. A couple of use cases have boosted this, like ETH’s backbone of the booming decentralized finance (DeFi) and non-fungible tokens (NFTs) sectors.

Furthermore, Ethereum recently showed better performance in annual returns than Bitcoin, with a 663% gain.

Therefore, the debate about Bitcoin versus Ethereum seems not to be going away anytime soon because ARK Invest CEO Cathie Wood recently stated that ETH was still undervalued than BTC.

Ethereum Median Fees Slip to 6-Month Low, Will this Reignite Rebound?

Over the weekend, the crypto market was in the red, with Ethereum (ETH) dropping below the psychological price of $3,000.

The second-largest cryptocurrency based on market capitalization was down by 2.14% in the last 24 hours to hit $2,866 during intraday trading, according to CoinMarketCap.

As a result, ETH’s median fees dropped to lows not seen since July 2021. Market insight provider Santiment explained:

“With Ethereum dropping back below $3,000, the demand to make $ETH transactions has stayed relatively low. And with this, transaction fees are now officially at their lowest level since July 28, 2021. Low fees typically maximize the chances of a bounce.”

Source:Santiment

Furthermore, the average gas fee on the Ethereum network slipped to $15.13 or 0.0052 ETH per transfer, a scenario not seen since September 2021, according to crypto insight provider Bitinfocharts.

Source:Bitinfocharts

A drop in gas fees is bullish because it can attract more participants to the ETH ecosystem, thus reigniting demand, and this boils down to a price increase based on market forces.

The fee issue is fundamental in aiding the sustainability of the Ethereum network, given that users have developed a keen eye as to where to get value for money in the crypto space.

For instance, “Ethereum killers” like Solana have gained steam because of their relatively lower fees and faster transaction rates.

With the merge to a consensus layer, formerly Ethereum 2.0, slated for the second quarter of this year, it remains to be seen whether the high gas fee challenge in the ETH ecosystem will be amicably addressed.

The consensus layer seeks to transition the present proof of work (PoW) consensus mechanism to a proof of stake (PoS) framework, deemed more cost-effective and environmentally friendly.

USDC Holders Panic Sell Amid Solvency Concerns

USD Coin (USDC), a popular stablecoin pegged to the U.S. dollar, has been facing solvency concerns since March 10, leading several holders to panic sell their holdings and switch to other stablecoins. USDC’s solvency fears arose after the disclosure that a portion of USDC’s collateral is held at Silicon Valley Bank, which was shut down by California authorities after revealing efforts to raise extra capital. The news of the bank’s closure and USDC’s collateral in it caused concern among USDC holders, leading to panic selling and mass exodus.

During the panic selling, several USDC holders attempted to switch to other stablecoins, but not all of them were successful. One user lost over 2 million USDC in a failed attempt to exchange them for Tether (USDT) using KyberSwap’s decentralized exchange aggregator. KyberSwap is a decentralized exchange (DEX) that aggregates liquidity from several DEXs. In the transaction, the user dumped a large amount of 3CRV (DAI/USDC/USDT) into USDT using KyberSwap’s aggregation router. In a postmortem, the KyberSwap protocol team explained that “since the market was undergoing a volatile period, all routes failed at estimating gas. The rate strongly fluctuated & only 0x’s route was successful but with a very poor rate.” After confirming the swap at 0x’s rate in a pop-up, a bot detected the opportunity and gained 2,085,256 USDC from that Univ2 pool. The protocol is in talks with the bot creator, the bot user, and third parties to assist with funds recovery.

Meanwhile, Tron founder Justin Sun reportedly withdrew 82 million USDC and exchanged them for Dai (DAI) using Aave v2, a decentralized finance protocol. The move came after Circle, the company behind USDC, disclosed holding $3.3 billion at the Silicon Valley Bank, nearly 23% of its reserves. While Circle assured USDC holders that liquidity operations would “resume as normal when banks open on Monday morning in the United States,” many holders remained unconvinced.

Wallets related to IOSG Ventures sold 118.73 million USDC for 105.67 million USDT and 2,756 Ether (ETH) worth $3.98 million via three addresses, on-chain data shows. The institution still holds nearly 45 million in USDC. These movements suggest that USDC holders were not confident about the stablecoin’s solvency and were trying to move their funds to other stablecoins or cryptocurrencies.

Despite the panic selling and exodus, the USDC price has slowly recovered after turbulent trading hours on March 11 to trade at $0.97 at the time of publication. However, the incident has once again highlighted the risks associated with stablecoins and the need for transparency and oversight in the crypto industry. The incident also underscores the importance of decentralized exchanges and protocols that offer users greater control and security over their assets.

While the USDC panic selling was a localized event, it could have wider implications for the stablecoin industry as a whole. Stablecoins have become increasingly popular in recent years due to their stability, ease of use, and ability to serve as a bridge between the traditional financial system and the cryptocurrency market. However, their rapid growth has also led to concerns about their regulation, oversight, and long-term viability.

Stablecoins are not backed by any physical asset but instead rely on a basket of assets or a reserve pool of funds to maintain their peg to the U.S. dollar or other currencies. This makes them vulnerable to market fluctuations, liquidity crises, and other risks that can undermine their stability and solvency.

In response to these concerns, regulators and industry players have called for greater transparency and oversight in the stablecoin industry. In September 2020, the Office of the Comptroller of the Currency (OCC) issued guidance allowing banks to hold reserves for stablecoin issuers, signaling greater regulatory support for the industry.

In addition, several stablecoin issuers have taken steps to increase transparency and accountability, including regular audits and disclosures of their reserve holdings. For example, Paxos, the issuer of Paxos Standard (PAX), a stablecoin pegged to the U.S. dollar, recently announced that it had obtained regulatory approval from the New York State Department of Financial Services (NYDFS) to offer its stablecoin to institutional clients.

Overall, while the USDC panic selling was a cause for concern for USDC holders, it also highlights the need for greater transparency and oversight in the stablecoin industry. Stablecoins are an important and growing part of the crypto ecosystem, but their stability and solvency depend on trust and confidence from users and regulators alike. As the industry continues to mature, it will be essential for stablecoin issuers and regulators to work together to address these challenges and ensure the long-term viability of stablecoins as a reliable and trustworthy form of digital currency.

Ethereum Network's Gas Fees Skyrocket Amid Memecoin Frenzy

The Ethereum network has been experiencing a surge in gas fees due to the ongoing memecoin frenzy. As a result, the network’s daily revenue has skyrocketed and has even surpassed that of Bitcoin. However, while some Ethereum proponents celebrate the growing revenue, many others are concerned about the network’s growing congestion and the difficulty in processing transactions.

According to recent reports, there has been an unusual shift in the top 10 gas-burning altcoins. Instead of the usual suspects like ETH, WETH, and USDT, memecoins such as TROLL, APED, and BOBO have become the top 10 spenders. The average gas price for Ethereum transactions as of April 20 was 81.94 gwei, which is a significant increase from 60.82 gwei on April 19 and 44.42 gwei last year.

Independent Ethereum educator Anthony Sassano noted the surge in daily fee revenue of the Ethereum network and pointed out that the network had brought in 28 times the revenue of Bitcoin. He also mentioned Ethereum layer-2 platforms like Arbitrum One that have outperformed the BTC network in terms of daily revenue due to the ongoing meme frenzy.

Ethereum proponents argue that the high gas fee and subsequent higher revenue highlight the network’s growing usability. However, many on Crypto Twitter were quick to point out that the extensive usage they are referring to is just a few thousand users gambling on memecoins. Some users have even paid gas fees as high as a few hundred dollars, while others complained about having to pay a higher gas fee than the actual transaction.

The soaring gas fees were also blamed on a Maximal Extractable Value (MEV) trading bot that is front-running memecoin trades on a massive scale. The bot in question, jaredfromsubway.eth, has been the top gas spender in the last 24 hours, spending 455 ETH ($950,000) and using 7% of the total gas of the network. In the last two months, it has spent more than 3,720 ETH ($7 million) in gas fees and performed more than 180,000 transactions. The Subway-themed bot is using the sandwich trading technique to pocket millions of dollars while congesting the network at the same time.

This situation highlights the need for Ethereum to address its scalability issues and find a long-term solution to address the increasing demand for memecoin trading. The current frenzy may be beneficial for short-term revenue, but it is also causing significant congestion and higher fees for users. The Ethereum network needs to find a balance between profitability and usability to ensure the long-term sustainability of the network.

In conclusion, the growing memecoin frenzy has caused Ethereum’s gas fees to skyrocket and has resulted in a surge of revenue for the network. However, it has also highlighted the growing congestion and difficulty in processing transactions. The Ethereum network needs to find a long-term solution to address its scalability issues and find a balance between profitability and usability to ensure its long-term sustainability.

Trader Spends $118k in Ether on Memecoin

In recent news, a single trader has spent an enormous amount of money on gas fees to purchase a memecoin called Four (FOUR) on the Ethereum network. The trader paid $118,000 in gas fees using Ether (ETH) to buy $155,000 worth of FOUR tokens through a Uniswap trade. The trade involved swapping 84 Wrapped Ether (WETH) for 13.8 billion FOUR tokens.

The trader voluntarily increased their gas fee to speed up the transaction time and has reportedly gained 133 ETH ($245,667) in unrealized profit on their investment in the memecoin. However, this raises the question of whether the rise in gas fees is sustainable for mass adoption, as many have criticized the fees for being too high.

The Ethereum network has been facing a lot of criticism for its gas fees, which have been increasing due to the rise in activity on the network. Some prominent Ethereum advocates have praised the heightened activity for its revenue-generating effects and long-term deflationary pressure on the supply of Ether. However, others have claimed that mass adoption will never be achieved if the network remains unaffordable.

Another major reason behind the drastic uptick in gas fees is the maximal extractable value (MEV) trading bot that is front-running memecoin trades en masse. A pseudonymous attacker known only as jaredfromsubway.eth has been profiting significantly from the heightened network use. The attacker has been using a sandwich attack to manipulate the price and profit from the user.

A sandwich attack occurs when an attacker “sandwiches” a victim’s transaction between their two transactions. Jared has cleared a whopping $950,000 in profits from the sandwich attacks alone. On April 20, Jared used 7% of the total gas on the network and spent 455 ETH in transaction fees.

In conclusion, the rise in gas fees on the Ethereum network has caused debates in the crypto community over its impact on mass adoption. The attacker, jaredfromsubway.eth, has been using a sandwich attack to manipulate the price and profit from the user. While some advocate for the heightened activity, others have criticized the fees for being too high, and it remains to be seen whether the network will become more affordable for mass adoption.

BNB Chain and MetaMask Resolve Glitch Affecting opBNB Gas Fees

Key Takeaways

BNB Chain and MetaMask have resolved a glitch that made opBNB’s gas fees appear unusually high.

The issue was due to MetaMask’s default minimum recommendation price for gas, which was not aligned with opBNB’s lower gas fees.

The corrected algorithm now accurately reflects opBNB’s lower gas fees, offering users fast, cheap, and secure transactions.

The Glitch Explained

MetaMask had initially set a default minimum recommendation price for gas based on the average of all networks. While this approach generally works for most Layer 1 (L1) and Layer 2 (L2) networks, it did not align with the gas price structure of opBNB. As a result, users were under the impression that opBNB was more expensive or slower than it actually is.

Collaboration for a Solution

BNB Chain reached out to MetaMask to address the issue. MetaMask was “extremely helpful and agreed to update their algorithm to accurately reflect the true opBNB gas price,” according to BNB Chain’s official statement. This collaborative effort led to an immediate solution, ensuring that the gas fees displayed are now in line with what opBNB actually charges.

Verifying the Fix

Users can verify the corrected gas fees by switching to the opBNB network on MetaMask and comparing the gas fee with other networks. The update aims to provide a more accurate representation of opBNB’s competitive advantage in terms of lower gas fees, especially when the network is not congested.

Implications for the Web3 Ecosystem

The resolution of this glitch is a significant step towards building a more robust and user-friendly Web3 ecosystem. It not only saves users money, time, and energy but also supports a decentralized and scalable blockchain.

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Circle Introduces Gas Station and Smart Contract Platform to Streamline Web3 Development

Circle, a global financial technology firm, has taken steps to simplify blockchain interactions for developers and businesses with the beta launch of two new Web3 Services products: Gas Station and Smart Contract Platform. These new services come as a follow-up to Circle’s recent Programmable Wallets offering. Gas Station aims to ease the cost burden associated with blockchain transactions for end users. Typically, Web3 users are required to pay a “gas fee” to conduct transactions on the blockchain. These fees have long been a point of friction for developers and businesses looking to integrate blockchain functionality into their apps.

Circle’s Gas Station allows those integrating their apps with Circle’s Programmable Wallets to offer a gasless transaction experience for users. Gagan Mac, Head of Product for Web3 Services at Circle, states that “With the launch of Gas Station, we are abstracting away blockchain transaction fees for end users… We’re reducing friction and making blockchain transactions more accessible to everyone.” This functionality currently supports Polygon on both its mainnet and testnet, and Ethereum on its testnet.

Working with smart contracts, which are fundamental to blockchain automation, often involves various operational challenges. These can include having to use different tools across various chains, and maintaining version control for live contracts. Circle’s Smart Contract Platform aims to overcome these barriers by providing a comprehensive suite for smart contract management. The platform uses REST APIs and offers a user-friendly interface, making it more accessible to traditional Web2 developers who may be unfamiliar with blockchain-specific languages like Solidity.

The platform allows for easier deployment and management of smart contracts, facilitating applications like NFT drops, DeFi experiences, and digital currency transactions. According to another media report, the Smart Contract Platform “gives developers the ability to deploy smart contracts by making use of a collection of pre-tested code templates and either a console or REST APIs.” It is available on Avalanche, Ethereum, and Polygon networks, and offers a “no-code” solution for deployment on Polygon.

Circle’s new Web3 Services products have the potential to significantly reduce the barriers to entry for both developers and end users in the blockchain ecosystem. For instance, the Singapore-based super app, Grab, is already piloting the Gas Station service to offer gas-free transactions involving non-fungible token (NFT) vouchers to its customers.

With these new services, Circle continues to broaden the scope and reduce the complexity of blockchain-based applications, aiming to make them as accessible and user-friendly as their Web2 counterparts.

Vitalik Buterin Highlights Polymarket's Prediction on Ethereum's Gas Fee Reduction

Ethereum co-founder Vitalik Buterin has brought to light on X (formerly Twitter) a Polymarket prediction that could signal a significant change in the network’s fee structure following the introduction of Ethereum Improvement Proposal (EIP) 4844. The forecast, a topic of intense discussion within the Ethereum community, estimates a notable reduction in transaction costs, potentially lowering the price of data blobs (~125 kB) to under 0.001 ETH.

The current expense of calldata on Ethereum, calculated at approximately 0.06 ETH factoring in gas and data size, has been a substantial bottleneck for the network’s scalability and user adoption. Polymarket’s speculative market, a barometer of community sentiment, shows that a sizable portion of participants, 46%, predict gas fees will fall between 0.0001 and 0.001 ETH a month after EIP-4844’s implementation. Another 24% believe it could settle between 0.001 and 0.01 ETH.

Buterin’s mention serves as a reminder that these market predictions, while speculative, provide insight into community expectations and can be utilized as a hedging tool against the potential outcome of the EIP-4844 upgrade. The proposal is a key part of Ethereum’s ongoing efforts to enhance its protocol, which includes the much-anticipated transition to Ethereum 2.0.

The reduction in gas fees anticipated by EIP-4844 could significantly amplify the network’s appeal to developers, encouraging the proliferation of decentralized applications (dApps) and boosting overall network activity. It also reflects the broader goal of Ethereum’s upgrade path: to maintain its competitive edge as a leading blockchain for smart contracts in the face of rising alternatives offering lower transaction fees.

Investors and the Ethereum community are keeping a watchful eye on the development and eventual outcome of EIP-4844. The reduction in gas fees has been long sought after and is expected to not only improve the user experience but also potentially influence the market sentiment around ETH positively.

Despite the positive outlook, upgrades of this magnitude come with inherent risks and uncertainties. Nonetheless, the community’s response to Buterin’s highlight of Polymarket’s predictions indicates a prevailing optimism about the proposal’s capacity to resolve some of Ethereum’s most pressing challenges related to gas fees. As the upgrade looms on the horizon, all eyes will be on its real-world impact versus the speculative predictions.