Crypto News

High Ethereum Transaction Fees Raise Concerns for ETH’s Future

Published by
Nonhlanhla P Dube
  • Ethereum transaction fees have hit highs last seen since May 2022 due to the increasing popularity of memecoins such as PEPE, causing concerns about the impact on the Ethereum network usage and its native cryptocurrency, ETH.
  • The surge in activity may indicate increasing interest in the crypto market, but it also highlights concerns about the network’s scalability and the impact of rising fees on users.
  • The rising transaction fees on the Ethereum network are seen as a disadvantage to the value of ETH, as users may seek alternative blockchains with lower transaction costs. However, with Ethereum’s scalability improvements in the pipeline, it remains to be seen how the network will evolve in the coming months.

As Ethereum transaction fees reach their highest levels since May 2022, concerns arise about the impact on the network’s usage and its native cryptocurrency, ETH. Ethereum, the second-largest crypto by market capitalization, is a popular platform for decentralized finance (DeFi) and non-fungible tokens (NFTs). However, the spike in transaction fees is mainly attributed to the increasing popularity of memecoins such as PEPE, causing on-chain activity to surge.

While this surge may indicate growing interest in the crypto market, it highlights concerns about the network’s scalability and the impact of rising fees on users. Dune Analytics data shows that Ethereum-based DEXs saw a surge in volume, with total trading volume on these platforms surpassing $63 billion in April alone. This represents a significant increase from March when the total trading volume was around $31 billion. Still, high transaction fees can deter smaller users from interacting with decentralized applications, making them priced out of the platform and its applications.

The rise in fees could also discourage smaller transactions and lead to a decline in demand for ETH. Ethereum co-founder Vitalik Buterin recently suggested that the network could scale up to 100,000 transactions per second, which could alleviate network scalability concerns and reduce transaction fees. However, this could still encourage users to seek alternative blockchains with lower transaction costs, such as Solana (SOL), Cardano (ADA), and Fantom (FTM), which are experiencing increased interest.

The increase in memecoin trading activity has led to a surge in transaction fees, making decentralized exchanges (DEXs) on Ethereum experience the highest level of users since 2021. ETH price has declined 0.4%, currently trading at $1.872, with a 24-low of $1,855 and a 24-high of $1,919. The asset’s trading volume has only ranged between $8 billion and $9 billion in the past two weeks, but with Ethereum’s scalability improvements in the pipeline, it remains to be seen how the network will evolve in the coming months.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Share
Published by
Nonhlanhla P Dube

Recent Posts

Tesla Unveils Refreshed Model 3 in North America with Exciting Upgrades

Model 3 Refresh: Tesla introduces a restyled Model 3 in North America, featuring a rear…

January 11, 2024

SEC Twitter Account Compromised, False Bitcoin ETF Approval Post Triggers Market Volatility

Unidentified individual accessed SEC's Twitter through a third party. Lack of two-factor authentication heightened vulnerability.…

January 11, 2024

Global Currency Markets Navigate Economic Uncertainties: Yen Weakens, Dollar Awaits U.S. Inflation Data

Japanese yen falls against the dollar and euro due to persistently shrinking real wages for…

January 11, 2024

Oil Prices Unmoved as Unexpected U.S. Inventory Build Raises Concerns

Unexpected Inventory Build: U.S. crude inventories unexpectedly grew, sparking concerns about weakening fuel demand and…

January 11, 2024

YanGuFang International Group Appoints Interim Executives Amidst CEO and CFO Detainment

Leadership Shake-up: CEO and CFO of YanGuFang International Group detained by Shanghai Police, prompting interim…

January 11, 2024

Cryptocurrency Market Analysis: SHIB, SOL, and ETH Navigate Challenging Terrain

SHIB breaches 200-day EMA, signaling bearish sentiment. Historical data suggests strong buyer reactions and potential…

January 11, 2024