Is Ethereum skyrocketing beneficial to ecology?

On the first working day of 2021, "rising" is the only keyword, as if assets all over the world are rising.

A shares 3500 points, US stocks Dow Jones, Nasdaq, S&P 500 index, silver, iron ore , Thread, Bitcoin, and Ethereum are all behind, and even the gas fees of Ethereum are rising.

The gas fee, which has not attracted attention for a long time since the DeFi mining wave, has once again caused wailing in the community.< /p>

Absurd gas fee

Data shows that the basic gas fee of Ethereum was once as high as 550Gwei, which was at a historical high level. After converting to legal currency, the amount is even more exaggerated. A simple contract call costs about 100 US dollars. Throughout 2019, the gas fee of Ethereum was basically maintained at 10-20 gwei.

According to OKLink data, as of press time, the entire network has not The number of confirmed transactions reached 120,000, and the network congestion caused the gas fee to continue to rise.

The happiest Ethereum miners are now, and the fee income has even reached 3 times the block reward . At present, the average income of each block of Ethereum is about 8 ETH, of which the system block reward is 2 ETH, and the remaining 6 ETH is fee income.

Caused the skyrocketing gas fee of Ethereum

The calculation of gas fee price is very simple, there are only two variables: Ethereum price and gwei.

The more obvious is the rise in the price of Ethereum, which is far from the historical record of $1440 set on January 1, 2018 The highs are only 40% off.

The surge of Fomo sentiment caused a surge in Ethereum trading volume, and users began to frequently operate and buy Ethereum. In the past 24 hours , the number of active addresses on the entire network reached 40,343, an increase of 111.30%. The utilization rate of the Ethereum network is constantly increasing, which means that the remaining available space is decreasing. Simply understood, there are fewer and fewer miners who are "available", and every miner is busy confirming transactions. At this time, the miners will give priority to packaging and confirming transactions with high gas fees, and transactions with low gas fees can only wait.

Dapp rises, interaction increases

In addition, after the rise of decentralized trading platforms represented by Uniswap this year, many users have become accustomed to using DEX for transactions and interactions. And every transaction on DEX will generate a handling fee. As mentioned above, in the face of big market conditions and network congestion, some users will continue to increase the gas fee in order to complete the transaction as soon as possible, which also causes the handling fee to continue to rise. .

In addition, the Ethereum ecosystem is prosperous and activities on the chain are frequent. The etherscan data of the Ethereum browser shows that in the ranking of gas consumption contracts, the stable currency USDT bears the brunt, and the gas consumption accounts for nearly 14%. According to Tether, the issuing company of USDT, USDT worth USD 13.5 billion has been issued to the Ethereum network. In the past 24 hours, the USDT contract address is the largest contributor to the gas fee on Ethereum, consuming a total of 2,232.13  ETH.

Except for the contract address which consumes the third gas fee (Rhythm BlockBeats Note: This address is marked as fraud contract address, which will not be described in detail here), and the remaining three gas fee consumers are decentralized trading platforms: Uniswap (gas fee consumption accounts for 7%), 1inch (gas fee consumption accounts for 1.72%) and Sushiswap (gas fee consumption accounts for 1.72%) and Sushiswap ( Gas fee consumption accounts for 1.21%).

Since the rise of liquidity mining this year, many users have chosen to transfer Ethereum from the centralized trading platform to participate in the DeFi ecosystem.

Inspired by Uniswap and 1inch airdrop tokens, users prefer to interact with various protocols to Looking forward to having the opportunity to get airdrops or rewards for the project. Up to now, although liquidity mining is not as hot as before, according to the statistics of Cryptoquant, the net outflow of Ethereum in the trading platform is still increasing. On January 3, about 10,000 Ethereum were withdrawn from the trading platform Outflow. These Ethereum either flow to DeFi, or enter DEX, or are escrowed. But in any case, the continuous outflow of Ethereum from centralized exchanges means that the activity on the chain will increase, which will also push up the gas fee.

The impact of rising gas fees on ecology

The current market value of Ethereum has reached 108 billion US dollars, accounting for nearly 1/8 of the total market value of cryptocurrencies. And Ethereum is currently the most prosperous community in the encryption field. The main way for ordinary users to participate in the ecology is to trade, pledge and interact with various protocols.

However, the skyrocketing gas fee has become one of the main obstacles for users to participate in the ecology. Since almost all activities in the Ethereum ecosystem rely on the use of ETH as a gas fee, users will completely stop participating in the ecosystem when the handling fee is higher than the expected income.

Larry Cermak, research director of the media The Block, tweeted today, "Uniswap is completely unusable now, A $4,000 transaction requires $100 in handling fees, which is really meaningless. Any rookie (newcomer) who comes in and sees this situation will be pissed off.” He said that newcomers usually don’t invest more than 5,000 USD, they will probably not consider using this product again when they see such a high handling fee.

Larry's concerns are not unreasonable. High gas fees will not only become a stumbling block for newcomers to enter the market, but also bring troubles to experienced traders. to bother. Cryptocurrency analyst and trader Lark Davis complained, "Ethereum gas fees are skyrocketing again, which makes Defi basically useless."

It is not only the trading users, but also the continuous increase in Gas fees, which has also caused the loss of game Dapp users on Ethereum to a certain extent. According to Dappradar statistics, Axie Infinity, a star game project with a maximum of 2,500 active independent wallets, lost 67% of its users in the past 24 hours, and the current number of users is only 239.

To put it simply, the skyrocketing price of Ethereum is not completely beneficial to the ecology, but because the skyrocketing price leads to an increase in gas, and it is not ruled out that some users who participate in liquidity mining or other similar ecology frequently operate, and hope that Ethereum will be used at a high point. cash out. In the case that the basic problems have not been resolved, the soaring price of Ethereum is not a good thing for the ecology.

As the first ecological blockchain in the encryption field, solving the problem of basic handling fees has become a breakthrough for Ethereum An effective way to develop bottlenecks.

Ethereum EIP1559 Improvement Proposal

When it comes to solving the gas fee problem, one cannot fail to mention the Ethereum EIP1559 solution. EIP1559  is an improvement proposal for the Ethereum transaction fee mechanism jointly proposed by Vitalik Buterin, the co-founder of Ethereum, and Eric Conner, the founder of ethhub_io.

Simply put, all transactions pay the same rate as much as possible to improve user experience. Elastic block size limit - Miners can periodically exceed the block size limit in response to surges in transaction demand, but only if users actually need and pay for it. Through the setting of the basic transaction fee (BASEFEE) and the tip (TIPS), and the BASEFEE is destroyed, the tip is given to the miner. This makes it possible for ETH to enter a deflationary mode under certain circumstances (if the destroyed Basefee exceeds the additional issuance of PoS).

EIP1559 has actually been brewing since 2018, but after it was first proposed, due to the community, miners, developers Opinions such as those of the author have not been able to reach a consensus and have not yet been implemented.

However, on December 21, 2020, EthHub co-founder Eric Conner tweeted that EIP-1559 will be implemented soon, and a large amount of ETH will be burned at that time. After that, under the condition of ensuring safety, the additional issuance of ETH will drop to 0 or negative value.

If EIP-1559 can be implemented as scheduled, the problem of excessive gas fees will hopefully be alleviated.

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