Ethereum fees are skyrocketing — But traders have alternatives


With the rapid growth of decentralized financing, the upcoming scaling developments for Ethereum 2.0 and the increasing crypto allocation in the portfolios of the institutes, the price for Ether (ETH) is rising rapidly. In fact, this is the first time that ETH has passed the $ 2,000 mark, a brand new all-time high. All of these measures may be bullish for ETH owners and DeFi investors, but for smaller DApp developers and other users on the network – like traders who use ERC-20-based stablecoins – they get priced out quickly.

This is because the cost of using a stable coin depends on the blockchain network in which it works. Once again, the Ethereum blockchain is plagued by network congestion and rising fees. On February 23, the average transaction fee for Ethereum rose to over USD 39 for the first time, making transactions using ERC-20 tokens such as the Ethereum-based versions of Tether (USDT) and USD Coin (USDC) expensive and even unaffordable.

While Eth2 can hold the answers long term with its transition to proof-of-stake, traders are frustrated right now. The good news is that there are alternatives that can help you avoid price fluctuations by keeping their value in stable coins – without paying high network fees.

Connected: DeFi users shouldn’t sit idly by waiting for Eth2 to make its move

USDT and USDC on the Algorand blockchain

As a public and open source smart contract blockchain that uses a PoS consensus algorithm, Algorand offers the scalability and speed that Ethereum currently lacks. By running USDT and USDC on Algorand, users can transact their preferred US dollar stable stablecoin at a fraction of the cost and time.

The technology behind the Algorand blockchain enables high throughput, so that more transactions can be processed per second than with other comparable blockchains such as Ethereum. In fact, Algorand can process more than 1,000 transactions per second, compared to Ethereum’s TPS of less than 15.

This means that transactions on Algorand are processed almost instantly – in less than five seconds. And instead of enduring a high average of $ 39, fees can go as high as $ 0.001 per transaction – regardless of the transaction size.

Using the Algorand Standard Asset Protocol to create new tokens, developers can launch new ASA tokens for use in a decentralized application or move existing assets to a faster alternative blockchain.

With a market capitalization well over $ 35 billion, Tethers USDT is the most popular stable coin in existence and the third largest cryptocurrency by market capitalization. USDT is currently issued on a number of blockchains including Bitcoin (Omni protocol), Ethereum (ERC-20 protocol), Tron (TRC-20 protocol), and Algorand (ASA protocol).

Currently, if a merchant wanted to transfer 100 USDT (ERC-20) it would cost about $ 3.43 in gas fees for the Ethereum network gas. The same transaction with ASA would be 100 times cheaper, which makes it extremely attractive, especially for high-frequency, high volume traders.

The further development of the crypto space

Ethereum, with the largest developer community in the crypto space and by far the highest number of DApps running on it, understands this better than anyone. However, the arrival of Ethereum 2.0 could still be some time away. The arrival of Ethereum 2.0 could still be some time away, however, and we need alternatives to Ethereum and its rising gas charges and network congestion.

Algorand is a technically sound protocol that offers the scalability essential for the continued adoption of crypto and the continued growth of storage space. This is an important step in the right direction as cryptocurrency approaches general acceptance.

Healthy competition like this is an incentive for layer-one protocols like Ethereum to step up the moat around their products and solve problems related to their scalability, transaction costs and interoperability. And that can only be good for all participants in the network.

This article does not contain any investment recommendations or recommendations. Every investment and trading step is associated with risks. Readers should do their own research in making their decision.

The views, thoughts, and opinions expressed here are the sole rights of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Jay Hao is a tech veteran and seasoned industry leader. Prior to OKEx, he focused on blockchain-powered applications for live video streaming and mobile games. Before entering the blockchain industry, he already had 21 years of solid experience in the semiconductor industry. He is also a recognized leader with successful product management experience. As the CEO of OKEx and a staunch supporter of blockchain technology, Jay believes that the technology will remove transaction barriers, increase efficiency and ultimately have a significant impact on the global economy.