The average fees on Ethereum reached an all-time high of nearly USD 70 in May 2021. Many hoped EIP-1559 to fix the problem with high rates on the network, but it did not.
Besides the DeFi-mania that started in 2020, the Ethereum ecosystem saw new trends in 2021. The most prominent were an increase in business dealing with NFTs and play-to-earn crypto games and the release of a new memecoin.
The large flow of new users of those products added to the congestion on the network to intensify. For that reason, the cost of the fees needed for its operation achieved record levels.
The average fees on Ethereum started the year at USD 3 and could end it at USD 27, according to BitInfoCharts. The rate reached an annual and all-time record on May 12th, when the daily average was almost USD 70.
In March, the community started to see glimpses of what the NFT-mania would be. Google searches for the term NFT soared worldwide, beginning a primarily upward trend that continues today.
Two months later, people could hear a new dog, the Shiba Inu (SHIB) memecoin, barking in the cryptocurrency neighborhood in May. Although they are of the same breed, SHIB has no blockchain but is an Ethereum token, unlike Dogecoin (DOGE).
The FOMO (fear of missing out) unfortunately gripped users when the price of SHIB started to rise. That also contributed to raising the cost of the fees on the Ethereum network.
The Community Is Disappointed that EIP-1559 Does Not Solve the Problem
Many Ethereum users hoped that the EIP-1559 upgrade would reduce the cost of the fees. Each transaction pays a base fee that burns and a tip that miners receive thanks to that implementation.
The reduction of rates was not the primary objective of that improvement proposal but a secondary consequence in the long term. However, many users misunderstood that it would lower the cost of the fees and disseminated that information.
Those hoping to operate their favorite decentralized applications (dApps) at cheaper rates after the approval of EIP-1559 were very disappointed.
The proposal became active in block 12,965,000 on August 5th, and there has been no significant change since then. The users of the network of Vitalik Buterin have to continue paying the same amount for operating on it.
High Fees Lead Many Users to Turn to other Blockchains
The above situation forced many users of various dApps to look for other blockchains. Despite not being decentralized, platforms like Binance and Solana monopolized much of the market for decentralized finance, non-fungible tokens, and play-to-earn crypto games.
The Polygon protocol, previously called Matic, also had exponential growth this year. Unlike the above networks, the latter shows an Ethereum-friendly narrative since it is a side chain seeking to decongest the mainnet. Many people even mistake it for a second-layer solution.
That situation has caused many platforms initially intended for working only on Ethereum to expand towards that protocol. They include the decentralized PoolTogether lottery, the 1inch exchange, and the non-fungible token marketplace OpenSea.
The increase in the cost of fees on Ethereum has led to many changes that have disappointed its users. They hope that the developers behind the network will upgrade the system with a solution to that problem.
By Alexander Salazar
