Ethereum fees have fallen by 80 percent
Recently, Ethereum miners’ income has decreased significantly. All due to the fall of Ethereum fees at least 80 percent this week. This is evidenced by the data of a recent report by Santiment Research.
Let’s look at two basic concepts that determine the cost of transactions in ETH:
- Gas — a unit of payment in the Ethereum network for transactions, creation and execution of smart contracts;
- Gwei — a piece of ETH coin, 1 ETH equals a billion gwei.
In other words, execution of transactions costs a certain amount of gas, the cost of which is set by the user. The total cost of transactions is formed on the free market of supply and demand. That is, the more demand for translations within the network, the higher their cost.
A bit of mathematics: according to the TradeBlock service, at the end of August the gas price was kept at 125 gwei for several days. At the current price for 1 ETH, the cost of some operations will be as follows:
- Standard transaction (operation for 21 thousand gas) — $0.59;
- Sending ERC-20 token (gas transaction for 52 146) — $1.46;
Deposit on the DeFi platform Compound (gas transaction for 200–400 thousand dollars) — $5; - Trade transaction on Kyber Network platform (cost over 500 thousand gas) — $10.
How to solve the problem of high fees in the Ethereum network?
There is an update of the Ethereum protocol called EIP1559, proposed by Vitalik Butterin and other developers. EIP1559 removes the auction model of transaction value formation. That is, after the integration of changes, users will no longer be able to set their own gas price in gwei: instead, they will introduce the concepts of the basic fee for the operation and premium “tips” for miners.
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