In recent weeks, the Ethereum community has been dealing with a concerning issue of rapidly increasing gas consumption on the network.
Gas fees on the Ethereum blockchain are charged for processing transactions and have been rising quickly.
Ethereum Gas Fee Hits 12-Month High
According to Dune’s data shared by data scientist Hildobby on Twitter, the median price of ETH gas has surged to 87, a level not seen in the past 12 months – since May 2022. The average transaction fee is now around $50, a significant increase from just a few months ago when it was less than $10.
The high gas fees have made it expensive for users to perform even simple transactions on the network, causing frustration among small-scale users, such as decentralized application (dApp) developers, traders, and retail investors.
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
The increasing demand for processing transactions on the Ethereum network, following the return of memecoins to the market, is one of the primary reasons for the high gas fees. Over the past few weeks, memecoin trading has gained momentum, with most of the trading activities taking place on the Ethereum blockchain.
PEPE is one such memecoin that has seen its market cap surge by more than 100x within the last two weeks since its launch in mid-April. Other memecoins such as ArbDogeAI, WOJAK, and SHIBAI have also recorded significant hype.
The resurgence in NFT trading on the Ethereum blockchain is another possible reason for the high ETH gas fee. However, reports revealed that NFT volumes reached $4.7 billion in Q1, 2023, a 137% increase from the previous year.
Additionally, Glassnode’s data indicated 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 of high gas fees. Ethereum Improvement Proposal (EIP) 4844 aims to reduce gas fees and transaction throughput by introducing a new type of transaction that accepts “blobs” of data.
Meanwhile, 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.