Ethereum Burns Nearly $600 Million in ETH Fees in Latest 30 Days
The rapid surge in ETH prices and the bustling memecoin trading activity have led to continuously escalating transaction fees on the Ethereum network.
Ethereum burns nearly $600 million in ETH fees in the last 30 days. Image: Decrypt
According to statistics from multiple sources, transaction gas fees on Ethereum have reached their highest levels in two years as network activity surges alongside ETH price increases, driven primarily by the wave of memecoin transactions.
Specifically, blockchain revenue from Ethereum transaction fees this week has reached $193 million, the highest since May 2022 - the time of the LUNA/UST crash - marking a 78% increase from the previous week.
Ethereum network fees daily revenue. Source: IntotheBlock (08/03/2024)
Average gas fees on Ethereum also regularly hover around $40 - $60 per token transfer/swap transaction, the highest since May 2023, posing usability challenges for users.
The surge in memecoin transactions is the primary driver behind this phenomenon. As reported by Coin68, since the beginning of March, a significant portion of cryptocurrency investors has poured money into memecoins like Shiba Inu (SHIB), Floki Inu (FLOKI), and Pepe (PEPE), causing these tokens to double in value in a short period.
Another testament to the bustling Ethereum network activity is the volume on the Uniswap DEX, which has surged by 40% to $20 billion this week, according to DefiLlama data.
The sharp increase in gas fees somewhat benefits holders of ETH tokens, as the EIP-1559 mechanism burns a portion of the transaction fees. According to ultrasound.money statistics, in the last 30 days, the Ethereum network has burned over 148,735 ETH, valued at over $580 million. During the same period, Ethereum has only minted an additional 73,570 ETH from transaction validation rewards, resulting in a network inflation rate of 0.76% per year.
Statistics on ETH fees burned in the last 30 days. Source: ultrasound.money (09/03/2024)
The applications burning the highest gas fees include the Uniswap and 0x DEXs, MetaMask wallet, layer-2 solutions like Arbitrum and Optimism, ETH and USDT transfers, and trading bots like BananaGun and Maestro.
Since the implementation of EIP-1559 in August 2022, over 4.1 million ETH has been burned through this mechanism.
Gas fees on Ethereum's layer-2 solutions have also surged, at times reaching $1 on Arbitrum. However, with the DenCun upgrade on March 13, Ethereum developers hope to reduce layer-2 fees to just a few cents, significantly alleviating fee pressures for users and enhancing scalability for the world's leading smart contract network.
On the evening of March 8, ETH prices surged to $3,993 - the highest since December 2021. However, unlike Bitcoin, which has set new ATHs, Ethereum still needs further momentum to surpass its November 2021 peak of $4,868.
Many investors are hopeful that Ethereum will receive ETF support similar to Bitcoin, potentially unlocking further growth opportunities for the currency. However, Ethereum's ETF prospects are perceived to be less favorable than Bitcoin's, with the SEC continuously postponing decisions on proposals from BlackRock and Fidelity.
1D chart of ETH/USDT pair on Binance at 09:05 AM on March 9, 2024
