Share this article
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.
Updated Sep 14, 2021, 9:34 a.m. Published Jul 22, 2020, 8:40 a.m.
Make us preferred on Google
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.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
- 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.
More For You
Bitcoin could fall to $10,000 as U.S. recession risk builds, Mike McGlone says
McGlone links bitcoin’s downturn to record U.S. market cap-to-GDP levels, low equity volatility and rising gold prices, warning of potential contagion into stocks.
What to know:
- Bloomberg Intelligence strategist Mike McGlone warns that collapsing crypto prices and a potential bitcoin slide toward $10,000 could signal mounting financial stress and foreshadow a U.S. recession.
- McGlone argues the post-2008 "buy the dip" era may be ending as crypto weakens, stock market valuations sit near century highs relative to GDP, and equity volatility remains unusually low.
- Market analyst Jason Fernandes counters that a drop to $10,000 bitcoin would likely require a severe systemic shock and recession, calling such an outcome a low-probability tail risk compared with a milder reset or consolidation.
Top Stories
