After a few weeks of lull, the exorbitant fees are back on Ethereum (ETH). For some, it’s a complete misunderstanding. Oh yes! Wasn’t the London hard fork supposed to solve this problem? In reality, the cause of the current situation is quite different.
A congestion that is starting to get tiresome
This is not the first time this year that the Ethereum network is facing a major congestion for several weeks. Indeed, too many transactions are sent on the network. The network is therefore struggling to process all of them. In fact, the mempool, a kind of queue of transactions waiting for validation, is getting longer. This means that the cost of having a transaction validated in an acceptable time frame is skyrocketing.
According to Etherscan’s data, a classic transaction costs an average of 50 dollars to complete. On the other hand, interactions with smart contracts, such as a simple swap on Uniswap, cost on average… $150.
Once again, this makes the Ethereum network almost unusable for the average user without a large wallet.
An EIP 1559 not efficient enough?
On August 5, the Ethereum network underwent a major update with the deployment of the London hard fork. This long-awaited hard fork introduced, among other things, EIP 1559, whose objective was to modify the network’s fee system. In addition, this update also introduced the destruction of a part of the transaction fees, called base fee.
Despite widespread belief, no reduction in transaction fees was to be expected from this EIP. However, a lull was observed, thanks in particular to the doubling of the gas limit – the amount of gas that can be used in a block.
This has effectively increased from 15 million to 30 million gwei per block. As the official Ethereum website reminds us, this gas limit determines the number of transactions that can be included in a block, as “the total amount of gas spent on all transactions in the block must be less than the block’s gas limit”.
Unfortunately, this respite was short-lived and blocks quickly reached average fill levels ranging from 50% to 100%. Whose fault is this? The NFTs!
NFTs: Ethereum’s new pet peeve
The NFT ecosystem on Ethereum has been in full swing for several weeks now.
Indeed, Opensea, the most used NFT marketplace on the network and the source of 15% of the gas used daily on Ethereum. In August, the latter recorded a record volume of $3.16 billion, an increase of 1,112% compared to July.
A situation that could well be repeated in September, this one having already accounted for a volume of more than $862 million, in its first week.
Beyond the gas consumed by Opensea, each smart contract allowing to generate NFTs also consumes gas. As a result, the gas usage generated by NFTs is much higher than the 15% of daily gas used by OpenSea.
As an example, the new NFT project of the moment, “Loot (for adventurers)”, alone consumes more than 2% of the total gas spent daily on Ethereum.
Fortunately, second-layer solutions, which aim to shift the load away from the main Ethereum blockchain, continue to grow. Offchain Labs, for example, has announced the launch of its Arbitrum solution for early September.
