The cost of moving Crypto on the Ethereum network is on its record high as some transactions on the Ethereum network require as high as over $100 gas fee to go through.
According to Ycharts’ report, the average Ethereum gas price as of 27th of February, 2021 stands at 158.44 Gwei.
It is very much difficult to overemphasize how the recent spike in Ethereum gas price has adversely affected ERC-20 projects in terms of running microtransaction payments on the Ethereum network
READ: 52.5 million Ethereum wallets are making money
Currently, some transactions on the Ethereum network cost as much as $100 and this remains a big concern for traders as they spend a lot in gas fees.
Gas fees are the fees required for transactions to be executed and validated by miners. The gas fee is an essential part of the Ethereum network and is dynamic as it fluctuates depending on network demand.
Adebayo Juwon, African Lead at FTX, a leading crypto exchange in an exclusive interview with Nairametrics gave key reasons why such costs are usually high;
“Sometimes, a transaction can experience a delay or total rejection if it does not meet the miners’ threshold. This threshold is dependent on two factors-network usages and congestion. Congested networks benefit miners more as they can charge excessive-high gas fees.
“Paying as high as a $60 fee on a single Uniswap transaction or a $10 to $40 fee just to withdraw an asset from a cryptocurrency exchange nullifies one of the important goals of blockchain technology which is ensuring minimal transaction fees traditional financial systems,” Juwon said.
READ: Nigeria to generate $6 billion through Blockchain by 2030-NITDA
That is wholly responsible for why Ethereum miners are most certainly smiling to the bank now. This reaction is triggered by transaction costs on the Ethereum network recently reaching a new hourly record.
Data retrieved from Glassnode, a crypto analytics firm, revealed that ETH miners on the network earned a staggering $3.5 million in just one hour.
#Ethereum miners earned $3.5M (!) in a single hour – the highest hourly revenue to date.
Chart 👉 https://t.co/MYE72aEpgU pic.twitter.com/HHdWnMaEtK
— glassnode (@glassnode) February 5, 2021
Adebayo, however, revealed some Crypto exchanges like FTX offer zero withdrawal fees to their users irrespective of the network an asset to be withdrawn belongs to.
READ: Binance Coin moves faster than Tesla, gains 114% in a week
What you must know: Ethereum Mining is a computationally in-depth work that requires a lot of computing time. An Ethereum miner gets rewarded for providing solutions to complex mathematical problems via blockchain technology.
At the moment, low capital traders may have no other option than to abandon blockchain transactions for the big guys because, in most cases, the little profit made may not be able to cover blockchain fees, especially during the withdrawal of crypto assets as all cryptocurrency exchanges charge standard Ethereum gas fee on all withdrawals.
The incessant hikes in Ethereum gas prices are turning the cryptocurrency ecosystem into an adventure exclusively for the Whales but fortunately, a thing like a Zero withdrawal fee ensures everyone has equal opportunity to be part of this ecosystem.