Victor Ugochukwu · Dec 14, 2020 . 5min read
Ethereum Network Transaction Fees falls only to bounce back again
Recent data from EthgasStation shows it takes approximately 89 Gwei in gas fees to make a quick transaction on Ethereum which confirms in less than 2 minutes.
By Victor Ugochukwu · Sep 7, 2020 . 5min read
Ethereum network after more than five months of the spike in transaction fees seems to be showing some signs of slow down. It fell by more than 58% within a few days.
Recent data from EthgasStation shows it takes approximately 89 Gwei in gas fees to make a quick transaction on Ethereum, which confirms in less than 2 minutes. Traders can facilitate an almost instantaneous transfer if they raise Gwei to 90. Or they can pay 81 and wait for 5 minutes for transactions to be confirmed.
DeFi growth has single-handedly pushed Ethereum transaction counts to a tipping point similar to the 2018 ICO all-time highs. However, with rising transaction counts comes increasing transaction fees. This is because Ethereum network as a settlement layer can only but take a limited number of transactions at a time. Specifically, Ethereum gets to process only an average of 15 transactions per second at its peak capacity, a far cry from the constant barrage of transactions propped up by DeFi.
As transactions kept increasing, miners were smiling to the bank. For the first time in history since the Ethereum network was created, transaction fees surpassed block rewards.
From the chart above, transaction count on Ethereum network has fallen to around 1.04 million. However, the median transaction fees in dollars are still around $3.30.
Layer 2 solutions to the rescue to rising transaction fees on Ethereum Network
Consequently, due to the sustained increase in transaction fees on the network, popular figures like Vitalik Buterin has encouraged people to opt for Layer 2 solutions.
Tether, the leading stablecoins minter has also been aggressively pursuing Layer 2 solution like Omisego and ZK- Rollups. While many have touted Eth 2.0 to be the final solution to the rising gas costs, some think it won’t. Thus, the solution they say would be never to depend on a single network but deploying across different blockchains.
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