Rushing to send coins to exchanges and DeFi platforms  has caused the Ethereum network to become heavily congested. High gas prices mean new transactions now have to wait up to 44 minutes to be confirmed.

Market Crash Causes Panic-Driven Network Activity, Liquidations
The recent market crash was also a stress test for networks, as immediately transaction activity picked up. The Ethereum network was the first to show a significant backlog, essentially clogging transactions for close to an hour. For anyone attempting to sell coins, the transaction may be either very expensive, or stall until prices correct even more.
Changpeng “CZ” Zhao noted the worsened network conditions:

#ETH network congestion. Average time for confirmations 2680 seconds (44 minutes) https://t.co/a2U8vF3Q9P pic.twitter.com/nPENzWA4yH
— CZ Binance (@cz_binance) March 12, 2020

While the ETH gas price is not exorbitant, it still requires $0.29 to get the transaction into a block sooner. USDT transactions are also affected, as nearly 2.9 billion stablecoins are only movable through the Ethereum network. This means shifts between exchanges will also become slower.
In the meantime, Ethereum prices unraveled to $138.12, on rapid selling. This caused a series of liquidations of DeFi derivative trading and collateralized debt. A slower network means potential problems for some of the participants, as they have little time before their collateral is liquidated. Fast action is required for projects like Maker, and with a congested network, this may not be possible for all traders.

ATTENTION REQUIRED
If you see that the next price update in @MakerDAO is below your CDP/Vault liquidation price, please make adjustments to protect your CDP accordingly.
We recommend Repaying, Paying back debt or adding more collateral to increase your ratio.
— DeFi Saver (@DeFiSaver) March 12, 2020

The sudden, rapid price unraveling has not affected the Bitcoin mempool that rapidly. But for Ethereum, the network shows it is both instrumental to the crypto ecosystem but also a source of failure.
The Ethereum network has congested during booming periods as well, or during high-level usage of one game or contract. But this time, the network reacted to market conditions, with potential repercussions and liquidations.
Panicked Selling Pressured Ethereum Prices
Some of the Ethereum transactions are also outright panicked selling, with coins noted going directly to exchanges for liquidation.

100,000 #ETH (13,677,560 USD) transferred from unknown wallet to #Kraken
Tx: https://t.co/p185vhlRPo
— Whale Alert (@whale_alert) March 12, 2020

It is uncertain how far the unraveling would go, as the world markets react across the board. But for ETH, the recent rally above $200 may have been a temporary fluke, as gains were easily erased by selling. The crypto market may not be all done with the price drops, and the Ethereum ecosystem is especially vulnerable.
Currently, decentralized exchanges and collateralized lending schemes which rely entirely on smart contracts will show if they can absorb suddenly increased activity. Curiously, the price of multi-collateral DAI has retained its $1 peg.

DeFi should avoid becoming DaiEthFi.#DeFi pic.twitter.com/tGY0uPiOas
— Daniel (@tangdaniu) March 12, 2020

DAI remains a point of weakness, as it has absorbed significant ETH reserves. Just before the crash, Ethereum also got a boost from increased holding behavior, though the new price dip may cause some whales to liquidate.
What do you make of the huge Ethereum network congestion right now? Add your views below!

Images via Shutterstock, Twitter @tangdaniu @Whale_Alert @DeFiSaver @cz_binance