The ethereum network is at the heart of the modern crypto ecosystem.
- Ethereum transaction fees are running red hot as people pile onto the network for NFTs and DeFi.
- Yet the high costs are infuriating users and sending many towards other blockchains such as solana.
- Developers are scrambling to fix the problem, which could threaten ethereum’s top-dog status.
Transaction fees on the ethereum blockchain are running red hot as NFT-mania clogs up the network.
It’s a problem that’s infuriating people and sending many looking elsewhere, to cheaper blockchains such as solana and avalanche.
Some even think it could be an existential threat to a cryptocurrency network that bills itself as the future of finance.
The ethereum network runs ether, which has a total market value of more than $500 billion, making it the world’s second-biggest cryptocurrency after bitcoin.
But the network is also at the centre of the modern crypto ecosystem. It’s the foundation on which non-fungible tokens (types of crypto collectibles) and decentralized finance are built. Both NFTs and DeFi are now huge industries.
Ethereum is running on surge pricing
On ethereum, people pay a “base fee” to have their transactions verified by other users known as “miners.”
Yet those fees have rocketed as interest in NFTs has soared, and more people try their hand at DeFi.
Imagine ethereum as a bit like a ride-hailing app that is struggling to add new drivers, in a city that’s just seen a huge influx of people. Now, for each ride (or transaction), people have to pay a huge surge price to get drivers to pick them up.
The average transaction or “gas” fee on the ethereum network rose to as high as $63 in November. That was its second-highest level ever, behind May’s record high of $70, according to crypto exchange Kraken’s analysts.
People are regularly paying more than $100 just to deposit, say, $50 worth of cryptocurrency on DeFi platforms – and that’s making many extremely angry.
Some are looking to solana
Not all crypto fans are upset. Networks such as solana, avalanche, and cardano are positioning themselves to profit.
Solana’s transaction fees are minuscule, just a fraction of a penny. The network is also much faster, handling many thousands of transactions per second, compared with double-digit figures for ethereum.
Solana’s native token sol has risen more than 400% over the past 180 days, according to Coingecko. Avalanche is up more than 500% over the same period, while ethereum has gained around 80%.
Read the full article here:
https://markets.businessinsider.com/news/currencies/ethereum-transaction-gas-fees-high-solana-avalanche-cardano-crypto-blockchain-2021-12