In recent weeks, the Ethereum community has faced a pressing issue that has left many users concerned: the rapidly increasing gas consumption on the network. Gas fees, which are charged for processing transactions on the Ethereum blockchain, have witnessed an alarming increase.
The median price of ETH gas, measured in gwei and averaged over seven days, has surged to a 12-month high of 87, as reported by data scientist Hildobby. This has resulted in an average transaction fee of around $50 – a remarkable jump from just a few months ago when fees were below $10.
This surge in gas fees has led to frustration among users who now find it increasingly expensive to conduct even simple transactions on the Ethereum network. Smaller-scale participants, such as decentralized application (dApp) developers, traders, and retail investors, are finding it challenging to navigate the Ethereum ecosystem due to the exorbitant gas costs.
A tweet from user 0xMQQ highlights this predicament as they mention an experience of paying a $40 gas fee for purchasing a $20 NFT. The central cause for these skyrocketing fees is the escalating demand for transaction processing on the network, driven primarily by the resurgence of memecoins after a two-year silence. Most trading activities involving memecoins like PEPE, ArbDogeAI, WOJAK, and SHIBAI have taken place on the Ethereum blockchain, contributing to the increased gas consumption.
Another possible reason for the high ETH gas fees is the increased NFT trading on the Ethereum blockchain. According to reports, NFT trading volumes reached $4.7 billion in Q1 2023, growing by 137% from the previous year. Data from the blockchain intelligence platform Glassnode substantiates this, revealing a 94% surge in gas consumption from NFT-related activities between January and February.
In response to this situation, the Ethereum community is actively seeking solutions, including the implementation of Ethereum Improvement Proposal (EIP) 4844. This proposal aims to reduce gas fees and transaction throughput by introducing a new type of transaction that accepts “blobs” of data.
While the community works on solving this pressing issue, users are forced to adapt their strategies. Some opt for executing transactions during off-peak hours when gas fees are typically lower, while others turn to alternative blockchain networks with lower fees, or layer 2 scaling solutions like Polygon to make transactions more affordable.