About 25% of all activity in Ethereum is due to Tether. The Fair Win game has accumulated USD 1.17 million in transaction fees.
The capacity of Ethereum has been expanded by the mining community to allow the network to process more transactions per second. This is a consequence of the increase in network traffic, largely due to the controversial stablecoin Tether and a gambling game called Fair Win.
Ethereum co-founder Vitalik Buterin said last week that block producers were beginning to increase GAS limits due to network congestion. In Ethereum, GAS is a separate cryptocurrency that is used to pay transaction fees and the GAS limit essentially controls the number of transactions that can be included in a block. It is similar to the Bitcoin block size limit.
However, GAS limits are more organic in the Ethereum network. Each miner can increase the GAS limit by 1/1024 of its current value, slowing it up or down, as the network gradually adapts to its surroundings.
Nowadays, miners continue raising the GAS limit, which causes it to reach above 10 million per block, an increase of 25% in the last week. This means that each Ethereum block can include about 25% more transactions than the previous week.
This allows the Ethereum network to process more transactions per second, thus helping to keep the fees lower. This means that the blockchain will grow faster, which makes it more expensive and difficult for the nodes to continue running the network.
Reasons for Congestion
Tether seems to be the main culprit of the growing number of Ethereum transactions. In recent months, the stablecoin has been eliminating Tethers issued in the Bitcoin network, and replacing them with tokens issued in Ethereum. Since so many Tether transactions are made every day, this has placed a heavy burden on the Ethereum network.
However, Tether is not the only cryptocurrency that occupies such a large amount of space in the Ethereum network. Fair Win, a blockchain-based gambling game, has accumulated USD 1.17 million in transaction fees in the last 30 days, proving that it is responsible for a large number of transactions.
According to intelligence provider Glassnode, decentralized finance (DeFi) applications are also putting pressure on the network as they become more popular. It notes that about 45% of transactions were made through smart contracts, which are largely used by DeFi applications.
The problem reached a climax on September 20th, when Ethereum’s daily transaction fees exceeded those of Bitcoin for the first time since March 2019. At that time, Ethereum users paid USD 207,000 in transaction fees against just USD 180,000 for Bitcoin. Ethereum fanatics consider this was something good because it showed that the network was in great demand.
However, Tron’s CEO Justin Sun, Ethereum’s rival, took advantage of the situation, encouraging people to use their network in exchange for lower fees. In the past, it has tried to tempt Ethereum developers to move away from the platform by offering them grants, but with little success.
By Willmen Blanco
