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Ethereum posts new highs as DeFi gas fees go through the roof

04 Feb 2021   #Ethereum

Ethereum’s gas fees are again spiking to record highs, rendering many decentralized finance protocols unusable for casual investors. After increasing roughly 20% in the last 24 hours, average Ethereum transaction fees are now sitting at a record $17.67. With many DeFi projects requiring the execution of complex smart contracts, there are reports fees associated with using protocols requiring complicated transactions now exceed $1,000. Amid the chaos, Twitter-user “Olive Allen” reported estimated gas fees of nearly $5,000 to accept a bid on Rarible.

When Cointelegraph checked earlier today a single large transaction on Synthetix was estimated at above $1,100 – however the protocol is undergoing an upgrade which could affect estimates. But even simple swaps using decentralized exchanges Uniswap and SushiSwap cost from $40 to $75.

Responding to the high fees, ConsensusRough podcast co-host ‘Checkmate’ warned DeFi users to consider the expense involved in executing smart contracts before investing. He shared the screenshot of a user that purports to show estimated gas fees exceeding the price of Ether. (While this could have been faked, it’s broadly in line with similar reports).

Ethereum is not alone in suffering congestion, with Bitcoin’s average fees currently exceeding $14 too. Despite the skyrocketing costs associated with utilizing the Bitcoin and Ethereum networks, traders appear vehemently bullish with Ether posting a new all-time of $1,700 at roughly 2 am UTC

Since breaking into new price highs on Feb. 2, Ether has gained roughly 14%. Bitcoin is also rallying, testing $38,000 after gaining 6% in the last 24 hours. Ether’s record fees are highlighting the utility of second-layer scaling solutions ahead of Ethereum’s Eth2’s overhaul. Synthentix is currently in a staged migration to Optimistic roll ups to alleviate gas prices, while other platforms are exploring rival layer-two solutions such as xDai, or scalable layer-one networks such as Polkadot.



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