Ethereum transaction fees have continued to surge as decentralized finance (DeFi) has continued its ascent to the crypto mainstream. Fees are getting so high that there are many starting to assert that solutions are necessary, lest Ethereum loses market share to other smart contract blockchains by crowding out a retail audience.
Related Reading: “Rich Dad Poor Dad” Author: Bitcoin Could Soon Become the “Fastest Horse”
Ethereum Transaction Fees Continue Ascent
On Tuesday, five developers rolled out the latest craze in DeFi: Yam.finance, whose native token is YAM. The protocol is an experimental platform that is attempting to bring together the DeFi concepts of “yield farming,” governance, and price elasticity. As the blog post announcing this project reads:
“Yam is an experimental protocol mashing up some of the most exciting innovations in programmable money and governance. Built by a team of DeFi natives, it features: an elastic supply to seek eventual price stability, a governable treasury to further support stability, fully on-chain governance to enable decentralized control and evolution from Day 1, and a fair distribution mechanism that incentivizes key community members to actively take the reins of governance.”
As abstract as this may sound, the launch of Yam has sent Ethereum users into a frenzy. Along with pushing the prices of DeFi assets up by 20-40% in a single day, Yam has caused immense congestion in the Ethereum blockchain.
This writer shared the tweet below on August 12th, indicating how far the fee situation has developed.
According to data from ETH Gas Station as of the time of my tweet, the gas price to send a “fast” transaction was 277 Gwei. This is a value of around 2,500% higher than it was at the start of the year.
This means that to send ETH from wallet to wallet, it would cost around $2.25; $5 to send ERC-20 tokens from wallet to wallet; $10 to trade coins on Uniswap, and much more if you deal with more complex transactions.
Wow… seems that🍠is having quite the effect on Ethereum transaction fees.
“Fast” recommended gas price: 277 Gwei.
That’s $2.25 to send ETH, ~$5 to send ERC-20s, $10 to trade on Uniswap, and more if you intend on doing more complex transactions. pic.twitter.com/kk6dhUItD9
— Nick Chong (@n1ckchong) August 12, 2020
This is arguably the highest fee era Ethereum has ever faced due to the implementation of increasingly complex transactions for DeFi platforms.
Related Reading: Crypto Tidbits: Bitcoin Explodes Past $11k, Ethereum 2.0 Nears, Cardano’s Shelley Launches
Scaling Solutions Needed
With the ongoing fee dilemma, there are many calling for scaling solutions. Qiao Wang, a former head of product at Messari, recently commented:
“I’ve changed my mind after using a dozen of Defi platforms. So long as ETH 2.0 is not fully rolled out, there’s an obvious opportunity for a highly scalable blockchain to dethrone Ethereum. Paying $10 transaction fee and waiting 15 seconds for settlement is just bad UX.”
I’ve changed my mind after using a dozen of Defi platforms. So long as ETH 2.0 is not fully rolled out, there’s an obvious opportunity for a highly scalable blockchain to dethrone Ethereum. Paying $10 transaction fee and waiting 15 seconds for settlement is just bad UX. https://t.co/vXAAFET3YK
— Qiao Wang (@QWQiao) June 28, 2020
Ethereum developers are currently working on solutions like EIP-1559, Rollups, and ETH2.
Related Reading: How U.S. Restrictions on Wechat & Other Chinese Brands Could Boost Crypto
Featured Image from Shutterstock Price tags: ethusd, ethbtc Charts from TradingView.com Ethereum Transaction Fees Are Going Parabolic as DeFi Continues Ascent