Ethereum network usage hits record high, will ETH price follow suit?
Editor's Note: This article comes fromCointelegraph Chinese (ID: CointelegraphChina), Author: ANTÓNIO MADEIRA, reprinted with authorization by Odaily.
Cointelegraph Chinese (ID: CointelegraphChina)
Cointelegraph Chinese (ID: CointelegraphChina)Delphi Digital
, Author: ANTÓNIO MADEIRA, reprinted with authorization by Odaily.
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Fuel Usage vs. Maximum Fuel Possible Source:
The total amount of gas used is different from the transaction fee metric in the Bitcoin blockchain. On the Ethereum network, transaction and smart contract fees are determined by the gas required and the price of the gas, a mechanism that allows fees to change dynamically and be somewhat decoupled from the price of Ethereum.
The amount of gas used in a given transaction depends on the computational complexity of the transaction. Gas prices, on the other hand, are chosen by the person executing the transaction and are priced in ether. The price is ultimately determined by Ethereum miners, who accept or reject transactions based on the gas price.
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USDT and decentralized exchanges dominate
This means that the increase in total gas usage comes from the use of more smart contracts, which are more complex and therefore require more gas.
According to the data of ETH Gas Station, the usage mainly comes from USDT, and the Ethereum gas fee alone costs 1.61 million USD. It was followed by decentralized finance (DeFi) applications as well as some scams and Ponzi schemes. USDT also leads the way in terms of average gas price used, at 35.5 Gwei.
After the USDT stablecoin, decentralized exchanges (DEXs) appear to be leading the pack in terms of popularity. According to DappRadar, IDEX is the most used dapp in terms of the number of transactions alone, while on the Ethereum network, IDEX and Kyber are both in the top three.
A recent survey also revealed that the highest awareness and usage of DeFi comes from decentralized exchanges.
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Higher transaction fees and gas limits
Increased usage of the Ethereum network leads to an increase in average transaction fees as miners prioritize processing transactions with higher gas prices. According to data from glassnode, the average transaction fee has increased five-fold from $0.08 in January 2020 to $0.41 at the time of writing. This also accounts for about 10% of miner revenue.
The total gas usage is limited by the block gas limit set by miners, which limits the size of the Ethereum blockchain by determining how many transactions are included in a block. The amount of gas used in each block has been increasing steadily, from 69% in January to 95% at the time of writing, and is also approaching the currently mandated cap.
Given the current increase in gas usage on the network, and the associated block gas limits, it is possible that Ethereum will face network congestion in the near future due to a number of factors. If gas usage rises to capped levels, users will have to compete with higher gas prices to execute transactions and smart contracts.
