TL;DR Breakdown
- Ethereum gas fees increased from 64 Gwei to 309 Gwei
- DeFi activities played a role in the rise of this gas fees
Ethereum gas fees have increased by close to 400% since the beginning of the new year. This was made known by Glassnode who placed the figure at $898,000 as total for transactions in one day. Within this period too, Ethereum price has risen to over $1000.
What this means is that the cost of transacting on the second largest crypto asset has become more expensive with the rise in value of the coin. The rise in gas fees also usually tend to show that there is a higher level of demand on the Ethereum network. Essentially, an increase in gas fees equals a more expensive cost of transacting on the platform.
Etherscan, an analytic site that keeps tabs on the gas fees on Ethereum says that the value has risen to 309 Gwei. The rise occurred between the first day of the year and today. Gwei is the unit in which Ethereum gas fees are measured in —it is a very small fraction of the ETH token.
The firm also confirmed that traders were now willing to pay a higher transaction fee because they want their transactions to be given more priority. According to the firm, some traders have paid as high as 700Gwei to have their transactions confirmed on the platform. The increase in the gas fees has also led to an increase in these activities too.
An example of the above is Nansen CEO, Alex Svenevik, who said he had to pay $23 as transaction fees for the approval of a transaction before he was asked to make another payment of $83 for an undisclosed transaction.
Ethereum gas fees rise is tied to DeFi
The major reason Ethereum has seen a rise in its gas fees is because of the level of development and usage that the decentralized Finance (DeFi) sector has seen in recent times.
The growing interest in DeFi is expected to hit top gear which could keep driving fees surrounding the network higher as more investors begin to enter into the fray.
