Binance would pay an additional $ 91 million in fees a year, according to one estimate. Coinbase, FTX, Kucoin, and Huobi, among others, do support the Ethereum upgrade.
EIP-1559, an improvement proposal that sets changes in the way of paying fees in Ethereum, has been in place for almost two months. But various exchanges and crypto custody platforms, including Binance, Kraken, Gate.io, Bitstamp, Gemini, Blockfi, Crypto.com, and Bittrex, do not support this update.
Tylor Monahan, CEO of asset management platform MyCrypto explained that the companies are wasting a considerable amount of money to avoid updating their systems.
In the case of Binance, the businesswoman says she is 100% sure that she is spending at least 13 ethers (ETH) more every day, which equals about USD 42,000. That’s assuming that around 25,000 ETH transactions would happen each day, and she has to pay an average of 0.000542 ETH ($ 1.67) for each transaction.
Monahan also explains her argument by using the Ethereum block 13,272,667 as a sample. It shows two transactions: one is from the Coinbase exchange, which has faced an exchange for EIP-1559, and another is from Binance. The transaction of the first exchange paid USD 4.81 of commissions, while that of Binance paid USD 6.47.
Monahan estimates that Binance is spending at least $ 42,000 more per day. It is only taking into account transactions of ETH, which is the native cryptocurrency of the Ethereum network.
The businesswoman also considered that sending any transaction other than an ETH transfer pays a much higher fee. On the other hand, The CEO of MyCrypto explained the situation using a transaction with the stable coin Tether USD (USDT). That stable coin had an overpayment of USD 15.73.
Even if that price is high and users use an overall average of $ 5 on 50,000 transactions per day, that would be overpaying $ 250,000 per day. If that figure gets multiplied by the 365 days that a year has, the result is an amount that could surpass USD 91 million.
Although the case of Binance stands out for being the exchange with the highest volume of trade, other platforms highlighted a similar situation, having not updated their system to be able to send transactions compatible with EIP-1559.
Among the platforms that have ship compatibility with the Ethereum update are FTX, Kucoin, and Huobi.
EIP-1559 on Ethereum
Ethereum Enhancement Proposal (or EIP) number 1,559 divides the fees paid into two parts. One of them is a standard base commission that gets burned, and the other is a tip that the sender of the transaction gives to the miners.
The reduction of rates is a usual consequence in the medium and long term. This reduction is the case with many transactions.
Other benefits that would arise when the adoption of the new rate scheme gets massively implemented would be a better user experience and better security on the network. These benefits would penetrate even second layer Ethereum solutions such as rollups.
By: Jenson Nuñez
