Ethereum’s Usability in Jeopardy as Meme Coin Frenzy Causes Skyrocketing Gas Fees: Concerns Rise

In the Brief:

  • The meme coin craze has caused Ethereum gas fees to rise rapidly
  • This creates concerns about network usability, leading to higher daily revenue compared to Bitcoin
  • Critics suggest that extensive usage is only a few thousand users gambling on meme coins
  • This surge in gas fees is attributed to a Maximal Extractable Value (MEV) trading bot and the use of meme coins like TROLL, APED, and BOBO

4 - 7 minute read

The surge in meme coin frenzy has come at a cost to the Ethereum network, with gas fees skyrocketing to a new multi-month high. As a result, there are concerns about the usability of Ethereum networks, with critics suggesting that the extensive usage being touted is just a few thousand users gambling on meme coins. While Ethereum proponents celebrate the growth in revenue, many others point out the growing congestion and difficulty in processing transactions.

The high transaction fee has swelled Ethereum’s daily revenue by multi-fold compared to Bitcoin. The average gas price for Ethereum transactions is currently 81.94 Gwei, up from 60.82 Gwei yesterday and 44.42 Gwei last year. This is a change of 34.74% from yesterday and 84.46% from last year. Gwei represents one billionth of one ETH.

Anthony Sassano, an independent Ethereum educator, shared that the network had done 28 times the revenue of Bitcoin. Additionally, Ethereum layer-2 platforms like Arbitrum One have outperformed the BTC network regarding daily revenue due to the ongoing meme frenzy. Ethereum proponents argue that the high gas fee and subsequent higher revenue highlight the network’s growing usability. However, critics argue that the extensive usage they are referring to is just a few thousand users gambling on meme coins.

The soaring gas fees are attributed to several factors. One reason is an aMaximal Extractable Value (MEV) trading bot that is front-running meme coin trades on a massive scale. The subway-themed bot is using the sandwich trading technique to pocket millions of dollars and congest the network at the same time. It is the top gas spender in the last 24 hours, spending 455 ETH ($950,000) and using 7% of the total gas of the network. In the last two months, it has spent more than 3,720 ETH ($7 million) in gas fees and performed more than 180,000 transactions.

ETH gas fee increase in last month. Source: Ychart

Additionally, instead of ETH, WETH, and USDT, meme coins such as TROLL, APED, and BOBO were among the top 10 gas-burning altcoins. A few users have reportedly paid gas fees as high as a few hundred dollars, while others complained about having to pay a higher gas fee than the actual transaction.

The surge in meme coin frenzy raises many concerns among traders. The soaring gas fees and network congestion could impact Ethereum’s market growth, potentially causing traders to lose out on profitable trades. Traders should exercise caution when buying and selling crypto assets involving meme coins.

The Bottom Line

The recent meme coin frenzy has impacted the usability of the Ethereum network negatively. Despite the growing revenue, the extensive usage being celebrated is just a few thousand users gambling on meme coins. Furthermore, soaring gas fees and network congestion may impact Ethereum’s market growth, so traders should exercise caution.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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