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DeFi Hype Has Sent Ethereum Fees Soaring to 2-Year High: Coin Metrics

defi-hype-has-sent-ethereum-fees-soaring-to-2-year-high:-coin-metrics

Ethereum founder Vitalik Buterin (CoinDesk archives)

Ethereum fees are at a two-year high as the hype around decentralized finance (DeFi) leads to a surge in network activity, according to Coin Metrics.

  • Coin Metrics’ data shows median transaction fees were just under $0.50 at press time – the highest since early August 2018.
  • Transaction fees increase alongside activity to avoid congestion in busy times.
  • Ethereum’s median gas price – a component of the transaction fees – has also reached levels not seen since early July 2018, according to Glassnode.
  • Connor Abendschien, a research analyst from Digital Assets Data, said a “massive increase” in ERC-20 standard stablecoins had also contributed to a rise in gas prices.
  • In a newsletter Tuesday, Coin Metrics analysts argued the spike in transaction fees came from increased network usage related to the DeFi hype.
  • Total value locked in DeFi projects recently passed the $3 billion mark, according to DeFi Pulse, having only crossed the billion-dollar milestone in February.
  • Ether transferred via smart contracts – a telltale sign of a DeFi transaction – was up to a near all-time high of one million ETH ($242.5 million) a day, Coin Metrics said.
  • The number of active ether addresses hit a two-year high a few weeks ago, but fell again as high fees pushed users off Ethereum, Coin Metrics said.
  • Richard Rosenblum, a co-founder of digital assets firm GSR, told CoinDesk the gas price spike was part of a wider scalability problem for Ethereum.

Disclosure

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

https://www.coindesk.com/defi-hype-has-sent-ethereum-fees-soaring-to-2-year-high-coin-metrics

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