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Ethereum network congestion causing high transaction fees

Ethereum network congestion causing high transaction fees

Ethereum Network congestion is observed on many days, and this can cause stratospherically high transaction charges. On some days, it can reach thirty dollars ($30).

The reason behind such an exorbitant fees spike is the increased competition for the ETH blocks. When distinct anomalous blocks are used, the transaction costs can increase for sending an ETH. Though the current fees hover around $0.10, the spike can occur randomly. What this represents is that there is still an inherent sense of competition for resources in the Ethereum network that is evident from the high traffic period.

DEFI and collectibles causes Ethereum Network congestion

High fees can be attributed to myriad other reasons as well as leading to a halt or difficulty in sending or receiving tokens. Regular users take the blunt during such periods. As per some experts, a prominent reason for this can be mining slowdown resulting from increasing difficulty due to the ice age feature of the mining. This means ice age isn’t coming anytime soon, and Ethereum production and subsequent block delays will be a regular feature.

ERC-271 token launch is also another reason. These collectible cryptos have caused Ethereum network congestion in the past as well. One more explanation behind fee surge is the abrupt increase in the smart contracts firing associated with the decentralized finance. When ETH prices fall suddenly, rules of liquidation were kicked in automatically along with various other price protection mechanisms related to crypto lending. Thus, these smart contracts were willingly paying high charges so that they can complete their activity.

Ethereum Network congestion is nothing new

The peak daily activity on the Ethereum network has reduced from its May 2019 height. From ninety-four percent (94%) in May 2019, the network’s present usage is around eighty-four percent (84%).

Similar network congestions were reported in 2018 and 2017 when the ICO craze was at its peak. Back in those days, regular transactions were delayed since the network was clogged with ICOs. Thus, high gas fees were natural. The FOMO factor is not applicable anymore, and the network has evolved to tackle the high fee situations accordingly.

Image Source: Pixabay

Gurpreet Thind

Gurpreet Thind

Gurpreet Thind is pursuing Masters in Electrical Engineering at University of Ottawa. His scholarly interests include IT, computer languages and cryptocurrencies. With a special interest in blockchain powered architectures, he seeks to explore the societal impact of digital currencies as finance of the future. He is passionate about learning new languages, cultures and social media.

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