Ethereum seems to have a brand new adversary from within: Its gas fees. With another catastrophic spike in fees, many decentralized finance (DeFi) protocols find themselves completely unusable by the casual investor, as it’s literally too expensive in terms of fees to do most DeFi actions.
All-New Problems With Gas Fees
Within the last 24 hours, Ethereum saw its average transaction fees sit at a staggering $17.67 per.
The big problem comes by way of how many of the space’s DeFi projects mandate the usage and execution of very complex smart contracts. As a result of these complicated transactions needed to take part, many have started to report gas fees exceeding $1,000. It’s gotten so bad within the ETH DeFi space that one user managed to highlight an estimated gas fee of $5,000, which must be given in order to simply accept a Rarible bid.
Almost 5k is the price to accept a bid on @rariblecom now!! 😂 Is it because of ETH high gas fees⛽️ or some type of bug 🐜 ? 🤔
Thoughts ? pic.twitter.com/tYoV1ilB85— Olive Allen (@IamOliveAllen) February 3, 2021
Brand New Considerations For Investors
Even Synthetix is having trouble. A single large transaction within the protocol could set an investor back $1,100. It should be noted, however, that Synthetix, in particular, is working towards an upgrade that could see a solution to this development.
One of the co-hosts of the ConsensusRough podcast, who goes by the name “Checkmate” took to offering a warning to the public in light of these spectacular and crippling gas fees.
Think very hard about whether you will be able to unwind your defi positions when the time comes to sell and gas fees are exponential.
Worth considering this risk because inability to exit is increasingly looking to be a reality. https://t.co/m9d09pUe0a
— _Checkmate 🔑⚡🎟🌱checkonchain.com (@_Checkmatey_) February 3, 2021
He warned the public to consider the fees that are involved in executing smart contracts in their entirety before making any form of investment within the network.
Paying More For The Trip Than What You’re Shipping
As justification, he showed a screenshot where a user had found himself in a position where the gas fees of the Ether transaction exceeds the value of the Ether being transacted. Now, it should be noted that these types of screenshots is not only easily made with a few image editing software out there, it’s human nature to kick something when it’s down. So, take any image evidence with a hefty grain of salt.
It should be noted, however, that these rampant gas fees aren’t exclusive to Ethereum. Bitcoin has suffered from it as well, with its average fees ranging above $14.
Even with the skyrocketing fees within the BTC and ETH networks, it should be noted that ETH traders are incredibly bullish, having recorded a new all-time high of $1,700.
Bitcoin is also seeing an impressive rally. The cryptocurrency has managed to go up by 6%, testing the $38,000 mark throughout the past 24 hours.
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