DeFi’s growth causes transaction fees on Ethereum to have hit fresh all-time highs, far outpacing those seen during the 2017 ICO mania
Investors seem to have a massive demand for Ethereum lately, especially the frenzy for DeFi. This has increased the demand for the Ethereum network significantly over the past few weeks and months, prompting a series of investors to turn to decentralized exchanges like Uniswap to trade ERC-20 tokens. And then, transaction fees on Ethereum to have hit fresh all-time highs
Ethereum fees hit new highs as demand spikes
As the network gets more and more used, as AZCoin News reported, the transaction costs on Ethereum skyrocketed, reaching an all-time high. This has made Ethereum mining highly profitable, with standard GPUs making significant monthly returns.
Investors are eyeing decentralized exchanges at an unprecedented rate in the past few months. Especially when they are buying a large amount of DeFi-related tokens, this has fueled massive gains among these coins, with many having seen profits rise 1,000% or more over the past few weeks.
So-called “yield farmers” have also been heavily transacting on Ethereum to take advantage of highly lucrative returns on various pools across the ecosystem, which requires that users make multiple transactions to move tokens between pools. This has pushed ETH fees to the highest level they’ve ever had, reflected in the number of ETH users paying daily. This figure peaked at 35,000 ETH yesterday.
The daily fees users spend have increased since the start of the year, but they only surpassed 2018 highs in late July when the DeFi craze started to grow at an unprecedented rate.
Miners have significantly benefited from this trend, with one analyst remarking that a single high-end consumer graphics card can generate around $ 90 in profits per month.
3x block reward*
2 ETH base, 6 total ETH in fees, total of 8ETH*
Fees are 3x, total is 4x.
— lowstrife (@lowstrife) September 2, 2020
These huge fees have made it nearly impossible for farmers to have a steady profit.
Hence, there is a high probability that the demand for Ethereum block space will soon decrease, reducing the profitability of mining.
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