The fee cost per transaction on the Ethereum network has risen so much that users have reduced the activity. In addition, that situation seems to have led them to look for other alternatives whose rates are lower.
The increasing cost of fees per transaction on the Ethereum network causes discomfort among users. The high rates indicate the growing demand for space in each block and are one of the reasons for the reduction in the activity.
According to Etherscan statistics, the fees per transaction exceed USD 20 on average. However, using a smart contract is much more expensive, as it requires a fee payment above USD 60.
EIP-1559, the network improvement proposal activated on August 5th, suggested that the cost of fees on Ethereum would gradually decrease. That upgrade changed the payment of fees, as part of it burns and part is a tip for miners.
Contrary to expectations, EIP-1559 has not caused transaction fees to decrease, as they have not stopped increasing.
The burning of fees may not have been effective as not all users are taking advantage. The volume of transactions that implement EIP-1559 rates is still 68%. Hence, around 32% of Ethereum trades are paying more than required.
Users Seem to Seek Alternatives to Avoid High Fees on Ethereum
Many people are using the Ethereum network in another way due to the high costs of transaction fees. They seem to have realized that transferring less than USD 100 is not worth it. As the amount they must pay exceeds USD 20, they have had to reduce the frequency of such operations.
Data from Glassnode reveals that Ethereum fee usage has reached the lowest level in 4 months. That seems a sign that users seek alternatives with lower fee costs.
Due to the high fee cost, many have decided to abandon Ethereum. Su Zhu, CEO of Singapore hedge fund Three Arrows Capital, tweeted that he would be leaving the network. The Singaporean executive believes that the founders of the decentralized blockchain have forgotten about their users.
Much of the community supported the tweet of Su Zhu, which he sees as a sign that users are angry. They expected a reduction in fees but then realized that they had to pay between USD 100 and USD 1,000 per transaction. Although the situation is dystopian, he stated that they celebrate the burning of rates.
Adoption among new users of the Ethereum network is difficult due to expensive fees. Additionally, Su Zhu believes that this extends to those looking to implement smart contracts.
According to data from BitInfoCharts, the average fee cost on Ethereum has skyrocketed by 1,360% since the beginning of June. They went from just USD 2.80 to USD 40.19 in just six months.
Ether (ETH) is the second cryptocurrency by market capitalization, so investors are waiting for a prompt solution to that problem. In that regard, the blockchain seems to be undergoing an upgrade to stabilize the costs of fees.
By Alexander Salazar
