Ethereum’s gas fees are rising to record highs again, rendering many decentralized financial protocols unusable for casual investors.
After an increase of around 20% in the past 24 hours, the average transaction fees for Ethereum are now at a record high of $ 17.67.
Many DeFi projects that require complex smart contracts to run have reporting fees for using logs that require complicated transactions now in excess of $ 1,000. Amid the chaos, Twitter user “Olive Allen” reported estimated gas charges of nearly $ 5,000 for accepting an offer for Rarible.
Almost 5,000 is the price to take a bid on @rariblecom now !! Is it because of the high gas fees at ETH or a mistake?
Thoughts ? pic.twitter.com/tYoV1ilB85
– Olive Allen (@IamOliveAllen) February 3, 2021
As of Cointelegraph’s review earlier today, a single transaction on Synthetix was valued at $ 1,162. However, the log is updated which could affect the estimates.
But even simple swaps via decentralized exchanges Uniswap and SushiSwap cost between 40 and 75 US dollars.
Previously tried a $ 75 swap for sushi. Gas charges were $ 74 for sushi swaps and $ 37 for uniswap. There is no logical point in exchanging anything with such fees.
– Kole Pfeiffer (@ 6pointd) February 4, 2021
In response to the high fees, ConsensusRough podcast co-host, Checkmate, warned DeFi users to consider the costs associated with running smart contracts before investing.
He shared the screenshot of a user pretending to be viewing estimated gas charges that are above the price of ether. (While this might be fake, it largely coincides with similar reports).
Think carefully about liquidating your defi positions when the time to sell is and gas charges are exponential.
This risk is worth considering as the inability to exit is increasingly becoming a reality. https://t.co/m9d09pUe0a
– _Checkmate ⚡checkonchain.com (@_Checkmatey_) February 3, 2021
Ethereum isn’t the only one suffering from congestion. Bitcoin’s average fees currently exceed $ 14 as well.
Despite the skyrocketing costs associated with using the Bitcoin and Ethereum networks, traders appear to be vehemently optimistic as Ether books a new all-time price of $ 1,700 at around 2 a.m. UTC
Since breaking into new price highs on February 2, ether has gained around 14%. Bitcoin is also bouncing back, testing $ 38,000 after gaining 6% in the past 24 hours.
Ether’s record fees underscore the usefulness of tier two scaling solutions ahead of the Ethereum Eth2 overhaul. Synthentix is currently in a gradual migration to optimistic roll-ups to drive gas prices lower, while other platforms are exploring competing layer-two solutions like xDai or scalable layer-one networks like Polkadot.
Ankr Network CEO and Co-Founder Chandler Song recently described the Crypto Bull Run as “Expos[ing] Many vulnerabilities in the Ethereum network that most DeFi projects are built on. ”
However, DeFi users may not have to wait until Eth2 to see a reduction in gas charges on the Ethereum mainnet. Developer Tim Beiko has seen significant progress in the EIP-1559 testnet over the past month.
EIP-1559 was proposed by Vitalik Buterin and Eric Conner in 2019 and recommended the introduction of a burning mechanism to reduce fee volatility. However, EIP-1559 encountered significant opposition from the Ethereum mining community with a proposal to reduce miners’ earnings to small tips sent along with a burned base fee.
Grayscale recently speculated that EIP-1559 could create a “positive feedback loop” for the price of Ethereum in the event that fee spending exceeds the rate at which the new offering is being created.