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.
⛽️ A highly unusual shift in top 10 gas burning #altcoins has emerged today. Instead of $ETH, $WETH, and $USDT being at the top of the fee distribution list, we're seeing new assets like $TROLL, $APED, and $BOBO among them. Read our latest deep dive. 👇 https://t.co/7SlmJ59k2m pic.twitter.com/Y2kaLKZTrL— Santiment (@santimentfeed) April 19, 2023
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.
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.
This is literally evidence of extensive usage though lol— Degentralisation 🦇🔊 🍏 (@Degentralise) April 20, 2023
Ethereum gas fees are purely a function of how much usage is occurring
If something made Ethereum essentially un-usable the gas fees would be extremely low
For retail, https://t.co/BktSOrwNqo is the more meaningful page:
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.