Apr 20, 2023
Meme Frenzy Fuels Soaring Ethereum Network Gas Fees
The Ethereum network has seen a surge of activity in recent weeks, with gas fees reaching a multi-month high. This increase in activity has resulted in a significant increase in daily revenue compared to Bitcoin (BTC), with Ethereum proponents celebrating the growth. However, the increase in network congestion and transaction difficulty has been met with criticism from some in the crypto space.
The top 10 gas-burning altcoins have seen an unusual shift in recent days, with memecoins such as TROLL, APED, and BOBO replacing the usual suspects of ETH (ETH), WETH, and USDT (USDT). The average gas price for Ethereum transactions as of April 20 was 81.94 gwei, up from 60.82 gwei on April 19 and 44.42 gwei last year — an increase of 34.74% from April 19 and 84.46% from April 20, 2022.
Independent Ethereum educator Anthony Sassano shared the surge in daily fee revenue of the Ethereum network and said that the second-largest blockchain had brought in 28 times the revenue of Bitcoin. He also cited Ethereum layer-2 platforms like Arbitrum One that have outperformed the BTC network in terms of daily revenue due to the ongoing meme frenzy.
Ethereum proponents argue that the high gas fee and subsequent higher revenue highlight the network’s growing usability. However, many on Crypto Twitter have pointed out that the extensive usage they are referring to is just a few thousand users gambling on memecoins. A few users reportedly paid gas fees as high as a few hundred dollars, while others complained about having to pay a higher gas fee than the actual transaction.
The high fees have also been attributed to a Maximal Extractable Value (MEV) trading bot named jaredfromsubway.eth. This bot has been the top gas spender in the last 24 hours, spending 455 ETH ($950,000) and using 7% of the total gas of the network. In the last two months, it spent more than 3,720 ETH ($7 million) in gas fees and performed more than 180,000 transactions.
The Subway-themed bot is using the sandwich trading technique to pocket millions of dollars while congesting the network at the same time. This has led to some criticism of the bot and its impact on the network.
The high transaction fees and network congestion have caused some to question the viability of Ethereum as a platform for selling NFTs, promoting crypto projects, and using for general web3 activities. While the network is still far from its peak capacity, the high fees and congestion are a reminder of the need for further scalability solutions.
Fortunately, there are a number of solutions being explored that could help reduce the fees and congestion. Layer-2 solutions like Arbitrum One are already showing promise in reducing the costs associated with transactions on the network. Additionally, projects like Polygon are looking to provide an off-chain solution to reduce the strain on the Ethereum network.
The high fees and congestion are also leading to the emergence of NFT marketing agencies and web3 agencies that are offering services to help projects promote and sell their NFTs. These agencies are leveraging Twitter and other social media platforms to help projects reach their target audiences and maximize their NFT sales.
The Ethereum network is in a period of transition, with high fees and congestion causing some to question its viability as a platform for web3 activities. However, with layer-2 solutions and NFT marketing agencies emerging to help reduce the fees and promote projects, the future of Ethereum remains bright.
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