The demand for Ethereum (ETH) is soaring. As a result, Ethereum rates reached a new historic high on Monday (4): $ 1,771,317.01. This is an increase of almost 400% since the 1st of January.
This increase is directly impacting transaction costs. As the IntoTheBlock analytics platform reported, the new fee record resulted in a substantial increase in the daily cost of gas to 569.31 Gwei.
It is worth mentioning that, as of today, the second largest cryptocurrency in market value rose to US $ 1,162. This is its highest value since February 1, 2018.
At the time of writing this article, the cryptocurrency is costing US $ 1,025, that is, R $ 5,273 when quoted in reais. This figure corresponds to an increase of about 20% only in the last 24 hours.
Ethereum gas on high
Gas is the amount charged each time a smart transaction or contract is executed on Ethereum. These tariffs, paid to miners, increase as the demand on the Ethereum network grows.
According to Glassnode, Ethereum miners raised $ 898,000 in fees in just 1 hour, setting a new record. When quoted in reais, this amount corresponds to R $ 4.5 million.
#Ethereum fees in the past hour (24h MA): $ 898,000 USD – All Time High.
Chart 👉 https://t.co/CDX7ubaw8E pic.twitter.com/g61U7phCAI
– glassnode (@glassnode) January 4, 2021
In parallel, these fees also make transactions on the Ethereum blockchain more expensive. On Twitter, Etherscan.io showed the correlation between the price of ETH and the costs of fees:
Visualizing ETH's price impact to tx costs 📊https: //t.co/RJLtyaSJXV pic.twitter.com/HlDkvZRZn6
– Etherscan.io (@etherscan) January 4, 2021
Reasons behind the high
According to Charles Storry, cofounder of PhutureDAO, one reason behind the higher rates is the growth of the decentralized finance (DeFi) market.
This is because many DeFi protocols are run on the Ethereum network. The protocol Uniswap, for example, is the second largest “consumer” of Ethereum's Gas, behind Tether (USDT).
“With the current growing interest in decentralized finance, the network is reaching its highest levels of activity. One of the side effects of the network's activity levels is the high gas rates that revolve around each transaction, ”noted Storry.
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