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DeFi Hype Has Sent Ethereum Fees Soaring to 2-Year High: Coin Metrics
The knock-on effects of the DeFi hype include high fees and less active users on Ethereum, according to Coin Metrics.
Ethereum fees are at a two-year high as the hype around decentralized finance (DeFi) leads to a surge in network activity, according to research firm Coin Metrics.
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- Coin Metrics' data shows median transaction fees were just under $0.50 at press time – the highest since August 2018.
- Transaction fees increase alongside activity to avoid congestion in busy times.
- Ethereum's median gas price – a component of the transaction fees – has also reached levels not seen since early July 2018, according to Glassnode.
- Connor Abendschein, a research analyst at Digital Assets Data, said a "massive increase" in ERC-20-standard stablecoins had also contributed to a rise in gas prices.
- In a newsletter Tuesday, Coin Metrics analysts argued the spike in transaction fees came from increased network usage related to the DeFi hype around yield farming.
- Total value locked in DeFi projects recently passed the $3 billion mark, according to DeFi Pulse, having only crossed the billion-dollar milestone in February.
- Ether transferred via smart contracts – a telltale sign of a DeFi transaction – was up to a near all-time high of one million ETH ($242.5 million) a day, Coin Metrics said.
- The number of active ether addresses hit a two-year high a few weeks ago, but fell again as high fees pushed users off Ethereum, Coin Metrics said.
- Richard Rosenblum, a co-founder of digital assets firm GSR, told CoinDesk the gas price spike was part of a wider scalability problem for Ethereum.
Paddy Baker
Paddy Baker is a London-based cryptocurrency reporter. He was previously senior journalist at Crypto Briefing.
Paddy holds positions in BTC and ETH, as well as smaller amounts of LTC, ZIL, NEO, BNB and BSV.
Omkar Godbole
Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team based in Mumbai, holds a masters degree in Finance and a Chartered Market Technician (CMT) member. Omkar previously worked at FXStreet, writing research on currency markets and as fundamental analyst at currency and commodities desk at Mumbai-based brokerage houses. Omkar holds small amounts of bitcoin, ether, BitTorrent, tron and dot.
