Ethereum Burns Nearly $600 Million in ETH Fees Over the Last 30 Days

In recent weeks, the Ethereum blockchain has witnessed a remarkable surge in transaction fees, attributed to the robust growth of ETH’s price and a bustling memecoin trading activity. The average gas fees on Ethereum have soared to their highest levels in two years, coinciding with a network activity resurgence propelled by ETH’s price increase and a wave of memecoin transactions.

This week, Ethereum’s blockchain revenue from transaction fees hit a staggering $193 million USD, the highest since the infamous LUNA/UST collapse in May 2022, marking a 78% increase from the previous week. The average gas fee for token transfers and swaps on Ethereum often ranged between $40 to $60 USD, the highest since May 2023, posing challenges for users due to the elevated costs.

Source: ultrasound.money

The trading frenzy around memecoins has been the primary driver behind this phenomenon. Since early March, a significant portion of crypto investors has poured money into memecoins like Shiba Inu (SHIB), Floki Inu (FLOKI), and Pepe (PEPE), resulting in these tokens doubling in value in a short span.

Another testament to the vibrant trading activity on the Ethereum network is the 40% increase in the trading volume of the decentralized exchange (DEX) Uniswap, reaching a milestone of $20 billion USD this week, according to data from DefiLlama.

The spike in gas fees has a silver lining for ETH token holders, thanks to the EIP-1559 mechanism, which burns a portion of the transaction fees. Statistics from ultrasound.money reveal that over the past 30 days, the Ethereum network has incinerated over 148,735 ETH, valued at more than $580 million USD. During the same period, Ethereum minted an additional 73,570 ETH from transaction validation rewards, leading to a deflation rate of 0.76% per annum on the network. The top applications burning the most gas include DEX Uniswap and 0x, MetaMask wallet, layer-2 solutions Arbitrum and Optimism, ETH and USDT transactions, and trading bots BananaGun and Maestro.

Since the implementation of EIP-1559 in August 2022, more than 4.1 million ETH have been burned through this mechanism.

Transaction fees on Ethereum’s layer-2 solutions have also surged, occasionally hitting $1 USD on Arbitrum. However, with the upcoming Dencun upgrade scheduled for March 13, Ethereum developers hope to significantly reduce layer-2 fees to just a few cents, alleviating fee pressure on users and enhancing the scalability of the world’s leading smart contract network.

On the evening of March 8, ETH’s price momentarily rose to $3,993 USD, the highest since December 2021. Yet, unlike Bitcoin, which has reached a new all-time high, Ethereum still requires an additional push to revisit its November 2021 peak of $4,868 USD.

Many investors are hopeful that Ethereum will receive ETF support similar to Bitcoin, potentially unlocking further growth opportunities for the cryptocurrency. However, Ethereum’s ETF prospects appear less promising compared to Bitcoin, as the SEC continues to delay decisions on proposals from BlackRock and Fidelity.

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