The total value of fees paid on the Ethereum (ETH) blockchain has exceeded that of Bitcoin (BTC) for the past 30 consecutive days. At the same time, two rogue smart contracts – one of them the number one dApp on Ethereum – are causing congestion on the network.
Ethereum Total Fees Overtake Bitcoin
Data provided by blockchain analysts Glassnode displays the crossover in total transaction fees which occurred between Bitcoin and Ethereum on June 5. On that date, the total sum harvested from Bitcoin transactions was recorded as $546,188, while Ethereum’s stood at $443,310.
That was the last time Bitcoin transactions accrued more value in fees than Ethereum. The large spike seen on the green line above represents the two recent mysterious ETH transactions which paid $2.6 million each in fees. Yet notably, the crossover in fee volume began six days before that spike occurred.
Popular Ethereum podcaster and co-founder of EthHub, Anthony Sassano, saw Ethereum’s rising fee volume as a sign of increased demand on the blockchain. Sassano tweeted on July 6:
“Total fees paid (in USD) on Ethereum has now been higher than Bitcoin for 30 days straight. It’s simple: There is greater demand to use Ethereum’s block space than Bitcoin’s.”
When asked whether this fact should prompt celebrations or tears, Sassano replied:
“Celebrate because high gas fees pushes innovation on scalability.”
Two Bad Apples Hog ETH Gas
Seen below via data from Bitinfocharts, Ethereum’s daily transactions recently topped 1.1 million on June 30, a day when Bitcoin processed a mere 299,000. Additionally, Ethereum’s transaction count rose all throughout 2020.
While that can partially explain the fee swing, attention should be paid to the Ethereum contracts that are currently consuming the most gas on the network.
Gas is a measure of the cost of computational power on Ethereum, and recently, two smart contracts have been consuming more than their fair share.
Data courtesy of Dune Analytics shows the Forsage dApp consumed 11.47% of Ethereum’s total daily gas in the past 24 hours. Forsage is the most popular dApp currently operating on Ethereum, with over 4,700 daily users according to DappStats.
Forsage is self-described as a “fully decentralized matrix marketing project,” and “the most thought-out marketing of this type.” Seen below, the aim is to purchase “slots” early, and then attract more “investors” to buy increasingly expensive slots which return more profit back to the investor.
The multi-level marketing nature of Forsage has already drawn the attention of the Philippines Security and Exchange Commission (SEC), which deemed it an unregistered security. Despite this, Forsage remains Ethereum’s number one dApp by unique daily user count.
Meanwhile, another multi-level marketing scheme operating on Ethereum known as MMM Global is currently consuming over 12% of the network’s gas, according to data from ETH Gas Station. The Russian Ponzi scheme is also responsible for 50% of all Paxos Stablecoin (PAX) transfers on Ethereum.
Gas Burners Push Up Transaction Fees
Between MMM Global and Forsage, nearly 24% of the Ethereum network is being used up by Ponzi operators.
Since the start of the year, average transaction fees on Ethereum increased by 915% from $0.06 to $0.67. In the same period, median transaction fees rose a ridiculous 2,564% from $0.02 to $0.73.
In the long term, the arrival of Ethereum 2.0’s scaling solutions will solve many of the congestion problems witnessed today. In the meantime, don’t mistake all of the activity on a busy blockchain as a sign of healthy demand.