Ethereum transaction cost 64 ETH as gas fees return to record highs
The Ethereum (ETH) blockchain network is currently causing huge concern among traders as the incidence of soaring gas fees appears to be returning. According to a shared preview from crypto-analytics service provider WhaleAlert, a trader paid up to 64 ETH worth around $118,600 at the time of writing in fees for a single trade.
💸 A royalty of 64 #ETH (119,121 USD) has just been paid for a single transaction!
— Whale Alert (@whale_alert) May 8, 2023
High gas fees are nothing new on the Ethereum network; however, it is particularly rare since the transition from proof-of-work (PoW) protocol to proof-of-stake (PoS) via The Merge. Although not an immediate dividend, high gas fees were one of the main considerations for the protocol’s transition to PoS. The reasoning is that a different transaction validation method can help decongest the network effectively.
With the high gas charges recorded at the moment, the opposite seems to be the case. The cause may have to do with the massive hype over the meme plays that sparked heavy activity on the network, causing it to crash over the weekend.
This network activity peaked when Binance Exchange listed PEPE tokens as well as Floki Inu for trading on its platform. This congestion, fueled in part by whale panic selling and the accompanying price spike, can reduce the gains accrued by these same coins, especially for retail traders.
Place Layer 2 solutions
The skyrocketing price of gas fees on Ethereum has contributed to the birth of innovative layer 2 protocols like Polygon zkEVM, Arbitrum, and Optimism. Although transaction fees on these protocols are only a fraction of what it costs on the Ethereum mainchain, users still bypass these L2s to transact on Ethereum.
The reason for this remains unclear, but with innovative or community-driven protocols building on the Ethereum mainnet, it usually becomes quite difficult for L2s to serve the purpose they are designed for, reducing the overhead of gas and defending scalability.
