The explosive growth of the most recent wave of popular meme coins has exerted pressure on Ethereum, driving gas fees even higher.
As demand for trading the PEPE meme cryptocurrency continues to skyrocket, Ethereum’s gas fees have surpassed their one-year high. On May 4, the average cost of a single Ethereum transaction surpassed $15.82.
Even though the average Ethereum transaction fee has risen to between $50 and $70 in 2021, nothing much has happened since the market crashed in May 2022.
It’s possible that the rise in gas fees is due to the popularity of meme coins, especially the recently released PEPE. In the last 24 hours, more PEPE was traded on Uniswap than Wrapped Bitcoin (WBTC) or USDT stablecoin. This means that more PEPE was traded than WBTC or USDT.
On May 1, PEPE entered the top 100 largest cryptocurrencies by market capitalization, achieving a valuation of over $500 million. Since then, the token’s value has continued to rise, most recently reaching $879 million.
Following the triumph of PEPE coin, numerous imitators representing various internet memes have emerged.
Uniswap trading pools for meme coins such as SPONGE, TURBO, BOB, and TRBNR are presently the most active smart contracts on Ethereum, according to data from crypto analytics firm Nansen.
Due to the higher gas fees, 9,392 ETH have been burned in the last 24 hours, which is the same as the highest amount in the last year. In 2021, Ethereum did a hard fork, which meant that a part of all transactions were lost. So, as the number of transactions on the network goes up, more ETH is destroyed.
Are scaling solutions for Ethereum useful?
The mainnet fees have gone up, and so have the gas fees for layer-2 transactions. This is because information about layer-2 transactions is also put in layer-1 blocks for security.
Layer-2 scaling methods can be either zero-knowledge proofs or optimistic. Both use a different technology called rollups, which groups transactions that happen off of the mainnet into a single, smaller transaction before closing on the mainnet.
In the world of blockchain technology, it has been observed that optimistic rollups have fared better than zero-knowledge proof (ZK)-based rollups, particularly in terms of impact during a certain event. Fees for token swaps on ZK-based scaling solutions such as Polygon zkEVM, Starknet, and zkSync Era mainnet have experienced a significant surge, ranging from $2 to $11.
A member of the zkSync Discord community revealed that they had to pay $11 to convert ETH to USDC, expressing surprise that “Is it gonna cost that much?” Another user complained about zkSync’s $30 fee for DeFi deposits.
L2 Fees data shows that the gas fees for sending ETH on Arbitrum One and Optimism, which are both Optimistic rollup options, are between $0.2 and $0.6 for swap tokens. This is about ten times higher than the average value.
Content Source: decrypt.com