Ethereum has reached quite an impasse, with the hourly revenue of ETH minors reaching a five-year record high. As it stands now, the gas fees on Ethereum is bringing in 2,275 ETH per hour for miners, which totals to around $880,000.
700 Gwei Gas Fees Recorded
This massive spike in gas fees came as a result of Uniswap. Yesterday, the decentralized exchange declared that it would make an airdrop of the UNI governance token to the past users of the decentralized exchange. Due to this announcement, over 70,000 users stampeded in to claim these free tokens, and the gas price surged up to 700 Gwei as a result.
Glassnode, the crypto analytics firm, made note that the gas fees had managed to grace the $1 million mark. These numbers effectively dwarf the level of revenue that was earned by miners during the great bull run of 2017. Back then, the highest peak in mining fees was just over 1,000 ETH per hour.
Almost $1M USD in fees were spent in a single hour!
This is a new record high (anomalous tx fees earlier this year excluded).
— glassnode (@glassnode) September 17, 2020
Consequences Of Too High Prices
As one would imagine, the average Ethereum user is none-too-pleased about all of this, as they’re essentially forced out of the network. This is also harming the major exchanges’ bottom line, with Coinbase Pro announcing earlier today that it will stop covering network fees. This, as one would imagine, led to a significant amount of disappointment for its users.
Starting today, Coinbase Pro will pass along network fees directly to our customers. These fees (sometimes referred to as “gas fees” on the Eth blockchain) are paid directly to crypto miners that process transactions and secure the respective network. https://t.co/hcuPoejwCz
— Coinbase Pro (@CoinbasePro) September 17, 2020
In Coinbase Pro’s statement, it cited how it had historically absorbed the fees on the behalf of the customers, since they could still profit while doing so. Even so, Coinbase Pro highlighted the sheer scope of adoption of applications, such as payments, DeFi, and many other projects. This, in turn, has seen the networks skyrocket in activity, which only boosts the gas fees even more. Reports show that other exchanges are considering this move too. They’re businesses, after all, not charities.
Su ZHu, the co-founder of Three Arrows Capital, gave a statement about the matter. He described the events as atrocious, due to Ethereum’s network being rendered unusable by the vast majority of people.
Failing By Rapid Success
The most troubling concern about this entire matter is how Ethereum is managing to undermine itself by its sheer popularity. The massive amounts of congestion, without a proper solution in sight, is making people move to alternative solutions. Binance is apparently reaping the benefits, having seen a large amount of growth within its Binance Smart Chain (BSC). Changpeng “CZ” Zhao, the CEO and founder of Binance, boasted that the platform stands at 40% of the total transaction volume compared to Ethereum.