The rising DeFi sector has contributed to a 3500 percent jump in the Ethereum transaction fee this year. As investor interest in the Decentralized Finance realm increases, the cost of an Ethereum transaction has also surged.
Rising Ethereum transaction fee means that users will have to shell out more to send and receive payments using Ethereum blockchain. As per information provided by BitInfoCharts, the average fee for a transaction earlier ranged around $0.084, which has now surged to touch the $3 mark. Guess someone has to pay the price for explosive growth in the DeFi sector.
Stratospheric jump in Ethereum transaction fee
Gas is the standard used to measure the Ethereum transaction fee. It is used as payment for operating on the ETH network. It covers transactions, decentralized apps, and also smart contracts. An appreciation in fees means that it is becoming costlier to use Ethereum projects.
Etherscan data further sheds light on the daily transaction volume. Currently, the total transactions on the network have risen to over one million per day, with network consuming transactions to the tune of 70 billion Gas daily. Similar figures were last observed around January 2018 when Ether price hovered around $1,400.
Rising DeFi takes its toll on ETH network users
Rising interest in the DeFi realm is stated to be the prime reason behind the increase in the Ethereum transaction fee. Decentralized Finance now commands a massive market cap of more than $13 billion. The total value locked in DeFi has also touched $5 billion.
There’s a rush to launch tokens serving DeFi-related services. Network transaction fees have always been significant since it determines the network’s performance and profitability. Miners can increase or decrease this feed to cover their costs. Earlier this year, ETH miners increased the Gas limit to boost network performance.
The increase helped drop the transaction fees, but slowly, the things have come back to square one. Now, the Ethereum transaction fee is reaching stratospheric levels, and users have to bear this heavy monetary burden.