With Ethereum’s fees hitting new highs amid Ether’s rally into new price highs, the fees associated with using some complex DeFi protocols has increased above $1,000.
After rising roughly 20% in the last 24 hours, average Ethereum transaction fees are currently sitting at a record $17.67.
With numerous 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 around $5,000 to accept a bid on Rarible.
A single large transaction on Synthetix was estimated at above $1,100 earlier today – 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 cost of executing smart contracts before investing.
He shared the screenshot of a user that purports to show estimated gas fees exceeding the price of ETH. (It is broadly in line with similar reports).
Ethereum is not alone in suffering congestion, with Bitcoin’s average fees now exceeding $14 too.
Despite the surging costs associated with utilizing the Bitcoin and Ethereum networks, traders look 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 now in a staged migration to Optimistic roll ups to alleviate gas prices, while other platforms are exploring rival layer-two solutions like xDai, or scalable layer-one networks like Polkadot.
Ankr Network CEO and co-founder chandler Song recently described the crypto bull run as “expos[ing] a lot of vulnerabilities of the Ethereum network, which most DeFi projects are built upon.”
However, DeFi users may not have to wait until Eth2 to see a reduction in gas fees on the Ethereum mainnet, with developer Tim Beiko saying big progress on the EIP-1559 testnet last month.
EIP-1559 was proposed by Vitalik Buterin and Eric Conner in 2019, suggesting the introduction of a burn mechanism to reduce fee volatility. However, with the proposal reducing miners’ revenues to small tips sent alongside a burned base fee, EIP-1559 has been met with huge resistance from Ethereum’s mining community.
Grayscale recently speculated that EIP-1559 could make a “positive feedback loop” for Ethereum’s price should fee expenditures exceed the rate new supply’s creation.