Ethereum fees soar making some DeFis practically unusable

With Ethereum’s fees skyrocketing to new highs as ETH entered price discovery mode, using some complex DeFi protocols was made impossible as the gas fees increased to over $1,000

Ethereum’s gas fees are spiking to record highs once again, rendering many DeFi protocols practically unusable for traders. After increasing somewhere in the ballpark of 20% in the last 24 hours, average ETH transaction fees are now at a record $17.67.

Transaction fees as high as $5,000

As many DeFi projects require the execution of complex smart contracts, some reports show that fees associated with using these protocols now exceed $1,000. As the chaos unveiled, Twitter user “Olive Allen” reported their estimated gas fees of nearly $5,000 to accept a Rarible bid.

Almost 5k is the price to accept a bid on @rariblecom now!! 😂 Is it because of ETH high gas fees⛽️ or some type of bug 🐜 ? 🤔

Thoughts ? pic.twitter.com/tYoV1ilB85

— Olive Allen (@IamOliveAllen) February 3, 2021

However, this is not the only case of such high transaction fees. A single large transaction on the Synthetix Network was estimated at above $1,100, while even simple swaps using Uniswap and SushiSwap cost anywhere from $40 to $75.

WTF??? pic.twitter.com/0luArQfeaK

— Ran Neuner (@cryptomanran) February 3, 2021

Projects exploring other options, but is it worth it?

Ethereum is not alone when it comes to soaring transaction fees, with Bitcoin’s average transaction costing over $14 at the moment. Despite the skyrocketing costs of utilising the BTC and ETH networks, traders appear extremely bullish on both cryptocurrencies. Ether has recently posted a new all-time high of $1,700.

Ether’s popularity is highlighting the skyrocketing fees and pointing to the utility of second-layer scaling solutions prior to Ethereum 2.0. While Synthentix is currently trying to reduce gas prices by performing a staged migration to Optimistic roll ups, other platforms are testing rival layer-two solutions such as xDai, or layer-one networks with better scaling such as Polkadot.

However, DeFi projects and users may not have to wait until Ethereum 2.0 to see a reduction in gas fees, with developer Tim Beiko recording significant progress on the EIP-1559 testnet in February. EIP-1559 is a mechanism that introduces a burn mechanism to the ETH network, all with the purpose to reduce fee volatility.