Tokens with no utility are bombarding the major cryptocurrency networks, driving up fees disproportionately, that is why Bitcoin is suffering one of its worst saturations in recent years.
PEPE memecoins are the main cause of saturation in both Bitcoin and Ethereum.
The memecoins season is taking its toll on cryptocurrency networks with increases exceeding more than 4,000% in just one month, these coins are at the top of the exchanges, causing the networks to be saturated, both Bitcoin and Ethereum.
The cryptocurrency developed by Vitalik Buterin, Ethereum, has already experienced this situation. In 2021, it suffered what was referred to within the ecosystem as Defi-mania. Decentralized finance platforms were breaking records, not only in assets mobilized, but also in commissions. For that year, on Ethereum, average network fees hovered around USD 71. In some particular cases they far exceeded this figure.
While Ethereum has already experienced this type of situation motivated by either tokens or decentralized platforms, in Bitcoin the case is a novelty due to the origin of the congestion. In 2021 Bitcoin suffered one of the worst congestions in its history, with average commissions around USD 62. However, the motivation was due to the historical maximum of its price above USD 67,000. Now the situation is different, memecoins have arrived in Bitcoin.
In February this year the Ordinals protocol became popular, it is a system that allows creating 100% native Bitcoin non fungible tokens (NFT). As a result of this protocol, BRC-20, a token system based on Ordinals, was born. And it was through these that memecoins arrived in Bitcoin, whose popularity has ended up saturating the network.
Memecoins in an Upside Momentum
Along with PEPE, other memecoins are grabbing the upside momentum. Binance recently announced that it would list PEPE and FLOKI, another memecoin, which sent the price of both up 80% and 60% correspondingly.
Why memecoin saturate Ethereum.
In the case of Ethereum, to understand the phenomenon, it is first worth noting that both PEPE and FLOKI, the main memecoin of the moment, are Ethereum tokens. So their high demand directly affects this network.
An example of this is how in the last 24 hours, according to CoinMarkecap data, PEPE is positioned as the seventh cryptocurrency with the highest trading volume. In the top 20 of trading volume in the last day, there are a total of 4 memecoin.
PEPE has surpassed the USD 1 billion mark. PEPE has surpassed the USD 1 billion mark. Source: CoinMarketCap.
This high interest translates directly into saturation as there are more people buying and selling these memecoins. An example of this is Uniswap, the leading decentralized exchange (DEX) used to get PEPE, shows that this memecoin is positioned as the third with the highest exchange volume in the last 24 hours, only behind ether (ETH) and USD Coin (USDC).
About 15% of all trading in Uniswap occurs through PEPE markets. About 15% of all trading on Uniswap occurs through PEPE markets, reported by Uniswap.org.
The reason why PEPE exchanges, or any other currency, saturate Ethereum is due to how the exchange occurs. Every time in Uniswap a decision is made to exchange a coin (memecoin or not) a transaction is generated to the network, higher volume of exchanges means more transactions on the network, therefore more congestion.
It is worth noting that Bitcoin saturation by memecoins is a particular case.
By Marina Meza
