As the meme coin mania rages on, Ethereum is experiencing a surge in demand, leading to increased transaction costs. The daily median gas price, representing Ethereum’s transaction fees hit a 12-month high of 87 gwei earlier this week, a value that has risen over 50% since the pepecoin (PEPE) token launch on April 18. This surge primarily results from meme-coin traders’ activity, as analytics firm CoinMetrics points out.
The most recent meme coin craze comes in the form of pepecoin, a frog-themed token that garnered enough attention to significantly contribute to Ethereum’s network demand. Amid the soaring popularity, PEPE has seen its valuation skyrocket by 300% over the weekend, clinching a near-$600 million fully diluted valuation.
Meme coins have a history of rallying Ethereum’s network and gaining significant value in an extremely short amount of time. Other instances include CHAD and 4TOKEN, which rallied 450% and 250% in just one week, while DINO saw an astonishing 500% rise in a mere two weeks.
On the other hand, the increased demand for the Ethereum network could be seen as a double-edged sword. While it demonstrates the network’s popularity and widespread use, it also heightens transaction costs, making Ethereum less attractive for potential users. As pepecoin mania took hold, Ethereum-based decentralized exchange Uniswap saw its pepecoin-wrapped ether (PEPE-WETH) liquidity pools become the most active by transaction numbers. PEPE traders have conducted over 410,000 transactions on Uniswap, burning approximately $10 million worth of gas.
It is worth noting that, although meme coins generate substantial attention and swift market value increases, they often exhibit high volatility, causing unpredictability in network demand and transaction cost fluctuations for Ethereum. This issue creates a challenging environment for investors and users of the Ethereum network.
Given the dual nature of the meme coin frenzy, it remains to be seen whether the increased popularity of tokens like pepecoin will lead to a more sustainable demand for Ethereum, or if the drawbacks of heightened transaction costs will deter potential users. The growing debate surrounding this issue highlights the importance of monitoring and understanding the evolving crypto market, especially as meme coins continue to make their mark in the digital assets space.