Ethereum Gas Fees Skyrocket 10x Amid On-Chain Panic – Here’s What You Need to Know

Ethereum network fees skyrocketed tenfold to as much as 318 Gwei on November 8, with a simple transaction costing around $10 at one point. This, paired with the ongoing crypto market crash, has triggered a decrease in the coin’s price to below the $1,200 level. The prices of other tokens have also declined sharply over the past 24 hours.

As a result of the fee spike, transaction costs carried out via the decentralized crypto exchange Uniswap reached as much as $76, pricing many users out, according to data collected by Trustnodes.

Industry observers note that the latest spike has been fueled by a wave of panic selling that started after major crypto exchange Binance announced it is considering acquiring rival FTX. Binance CEO Changpeng ‘CZ’ Zhao said that the move would allow relieving pressure on FTX’s liquidity.

“This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch,” Zhao tweeted. 

As of 10:40 a.m. UTC, Ethereum was trading at $1,171, down around 12% in 24 hours.

In crypto, gas fees stand for compensation used to cover work computed to complete transactions. Gwei is the smallest unit of Ethereum, and it is paid to facilitate transactions.

“In times of high network demand, these blocks operated at total capacity. As a result, users often had to wait for high demand to reduce to get included in a block, which led to a poor user experience,” according to the project’s website. 

The upgrade introduced variable-size blocks to the blockchain, with each block assigning a target size of 15 million gas, but also allowing the size of blocks to expand or decrease in accordance with network demand up until the block limit of 30 million gas.