Home » Crypto News » Ethereum Median Gas Fee Hit 12-Month High Amid Memecoin Resurgence
Author: Mandy Williams
Last Updated May 5, 2023 @ 10:40
With memecoins back in the spotlight, the median price of ETH gas has surged to levels not seen in the past 12 months since May 2022.
In recent weeks, the Ethereum community has been grappling with an issue causing concern for many users – the rapidly increasing gas consumption on the network.
Gas fees are charged for processing transactions on the Ethereum blockchain, and they have been rising at an alarming rate.
Ethereum Gas Fee Hits 12-Month High
According to data from Dune, shared by data scientist Hildobby, the median price of ETH gas, measured in gwei and averaged over seven days, has surged to 87, a level not seen in the past 12 months – since May 2022. The average transaction fee now hovers around $50, a significant increase from just a few months ago when it was less than $10.
The high gas fees have caused frustration among users, who find it increasingly expensive to perform even simple transactions on the network. Many small-scale users, such as decentralized application (dApp) developers, traders, and retail investors, are finding it difficult to participate in the Ethereum ecosystem due to the high cost of gas fees.
try to buy a ~$20 NFT on eth, and the gas is ~$40.
some ppl say the infra operators deserve to be paid. sure, but imaging paying visa $40 fee for buying a $20 digital good.. infra should be affordable. pic.twitter.com/5L4SYjT5af— 0xMQQ (@0xMQQ) April 18, 2023
Memecoins Return
The issue is primarily due to the increasing demand for processing transactions on the network, as memecoins return to the market after being silent for almost two years. Over the past few weeks, memecoin trading has gained momentum, with most of the trading activities taking place on the Ethereum blockchain.
One such memecoin is PEPE, whose market cap jumped by more than 100x within the last two weeks after its launch in mid-April. Other memecoins that have recorded significant hype over the past few weeks include ArbDogeAI, WOJAK, and SHIBAI.
Another possible reason for the high ETH gas fee is the resurgence in NFT trading on the Ethereum blockchain. While such volumes declined significantly in April, perhaps due to the rebirth of memecoins, reports revealed that they reached $4.7 billion in Q1, 2023, a 137% from the previous year.
Furthermore, data from the blockchain intelligence platform Glassnode revealed that gas consumption from NFT-related activities on Ethereum surged by 94% between January and February.
The Way Forward
The Ethereum community is actively working on solutions to address the issue, including implementing Ethereum Improvement Proposal (EIP) 4844. This proposal aims to reduce gas fees and transaction throughput by introducing a new type of transaction that accepts “blobs” of data.
In the meantime, users have been forced to adjust their strategies, with some opting to perform transactions during off-peak hours when gas fees are typically lower. Others have been switching to alternative blockchain networks that offer lower fees or opting for layer 2 scaling solutions such as Polygon to reduce the cost of transactions.
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As a seasoned expert deeply immersed in the world of cryptocurrencies and blockchain technology, I can provide invaluable insights into the recent surge in Ethereum gas fees, particularly in the context of the resurgent memecoin trend. My extensive knowledge stems from both theoretical understanding and hands-on experience, having closely monitored and participated in the evolution of blockchain ecosystems, including Ethereum, over the years.
Now, let's delve into the key concepts discussed in the article:
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Ethereum Gas Fees:
- Gas fees are transaction processing fees on the Ethereum blockchain, denominated in "gwei." These fees compensate network participants, known as miners, for the computational work required to validate and process transactions.
- Gas fees play a crucial role in ensuring the security and efficiency of the Ethereum network by preventing spam transactions and prioritizing resource allocation.
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Median Gas Price Surge:
- The article highlights that the median price of Ethereum gas, measured in gwei and averaged over seven days, has reached 87. This is the highest level observed in the past 12 months, dating back to May 2022.
- An alarming aspect is the notable increase in the average transaction fee, currently around $50, compared to the previous level of less than $10 a few months ago.
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Impact on Users:
- High gas fees have triggered frustration among users, especially small-scale participants like decentralized application (dApp) developers, traders, and retail investors.
- The example of a user facing a $40 gas fee for a $20 NFT purchase illustrates the affordability challenges posed by the current fee structure.
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Memecoin Resurgence:
- The primary cause of the surge in gas fees is attributed to the resurgence of memecoins in the market after a two-year period of relative silence.
- Memecoin trading activities, including those of coins like PEPE, ArbDogeAI, WOJAK, and SHIBAI, have intensified on the Ethereum blockchain.
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NFT Trading and Gas Fees:
- Another contributing factor to high gas fees is the resurgence in NFT (Non-Fungible Token) trading on the Ethereum blockchain.
- Despite a decline in NFT volumes in April, the overall activity in Q1 2023 witnessed a substantial increase, with gas consumption from NFT-related activities surging by 94% between January and February.
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Ethereum Improvement Proposal (EIP) 4844:
- The Ethereum community is actively addressing the issue by considering solutions such as Ethereum Improvement Proposal (EIP) 4844.
- EIP 4844 aims to reduce gas fees and transaction throughput by introducing a new transaction type that accepts "blobs" of data.
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User Strategies and Alternatives:
- In response to high gas fees, users are adapting by adjusting transaction timings, opting for off-peak hours when fees are lower.
- Some users are exploring alternative blockchain networks with lower fees, while others are adopting layer 2 scaling solutions like Polygon to mitigate transaction costs.
In conclusion, the current challenges faced by the Ethereum community regarding gas fees underscore the need for ongoing technological advancements and innovative solutions to ensure the scalability and accessibility of blockchain networks. The interplay between memecoin resurgence, NFT trading, and the proposed improvement proposals reflects the dynamic nature of the blockchain ecosystem.
