With the price of ETH crossing the $1,000 mark for the first time since 2018, the average gas fee on the Ethereum network set a new all-time high (ATH) on Jan. 4.
Ethereum Gas Fees Almost Touched $20
According to data from YCharts on Monday (Jan. 4, 2021), the average ETH gas fee on the Ethereum network was at $17.43, consequently setting a new ATH.
Ethereum’s network gas fees previously recorded an ATH of $12 in September 2020. At the time, the gas fee skyrocketed as a result of the DeFi craze, with a total of $166 million reportedly spent on transaction fees in September alone.
The YCharts data showed a rise and fall in transaction fees since Dec. 11, 2020. However, there has been a steady climb in gas price since the New Year. Between Jan. 1 and Jan. 4, average gas prices rose from $3.564 to $17.43, with close to a 60 percent jump between Jan. 3 and Jan. 4.
During the DeFi summer of 2020, ETH gas cost rose to such a level that miner revenues from fees exceeded block rewards as reported by BTCManager at the time. Indeed, the DeFI mania of Q3 2020 put even more strain on the Ethereum network causing congestion and the inevitable spike in gas price as network utilization topped 96 percent.
Between DeFi ‘degeneracy’ and stablecoin transactions, Ethereum is the most actively used blockchain network. Indeed, ETH and Tether (USDT) accounted for a major proportion of the over $1 trillion in value transfer facilitated via blockchain networks in 2020.
Meanwhile, the rise in eth transaction fees resulting from an increase in Ethereum network activity has been a concern for users. There have been calls for embracing the implementation of layer-2 (L2) scaling solutions like zk-rollups and other enhancement protocols.
Also, the introduction of Ethereum 2.0, with its proof-of-stake consensus, could possibly boost scalability and consequently reduce transactions. While the implementation of the new Ethereum mainnet could take years, over $1 billion has been staked on the Ethereum 2.0 smart contract deposit as of Dec. 2020.
Ethereum’s average gas fee hike comes amid Ether’s new 24-hour trading volume record. According to Coinmarketcap, the second-largest cryptocurrency’s trading volume crossed $53 billion with the spot price attempting to stage an assault on its $1,400 all-time high price.
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