Ethereum’s average transaction fees are falling rapidly, while active addresses on the network continue to grow, possibly in anticipation of Ethereum 2.0.
Ethereum Fees Fall 65% in 10 Days
Data from blockchain analysts at Bitinfocharts shows Ethereum’s average transaction fees fell by 65% in the 10 days since August 13. Ethereum marked its highest transaction fees ever on that date, when the average ETH transaction cost $6.62. At time of writing, average fees are back down at $2.28.
For some context, Ethereum’s average fees rarely exceeded $0.10 all throughout the first half of 2020. The tide began to turn in the summer months, as fees rose all throughout July and August, eventually hitting the all-time high shown above.
The culprits responsible for boosting Ethereum’s average transaction fees can be found via publicly available data found on EthGasStation.com. Gas is a measure of the internal cost of submitting a transaction to the Ethereum network.
As of August 24, the highest ‘gas burner’ on Ethereum is Uniswap (v2) decentralized exchange (DEX), which accounts for over 24% of the network’s activity. The second highest gas burner is another DEX, 1inch Exchange, which consumes over 6% of the gas at time of writing.
Uniswap has risen to become a major decentralized competitor to centralized exchanges in recent months. The DEX has regularly recorded trading volume that exceeds numerous well-known centralized exchanges, and its popularity can be seen on the effect it has had on the Ethereum blockchain.
Active Addresses Increase by 208%
Another factor responsible for Ethereum’s recent network congestion could be the steady rise in its active address count. Since January of this year, Ethereum’s active address count has risen from 195,000 to 601,000 – an incredible 208% increase.
The trebling of Ethereum’s active address count can be seen as nothing but a positive in the long run, even if it probably contributed to network congestion and increased fees.
Coupled with the increase in the price of ETH, the sudden influx of Ethereum users could be a sign of anticipation of Ethereum 2.0.
A major feature of Ethereum 2.0 will be its proof-of-stake (PoS) consensus mechanism, where users stake ETH to secure the network, and earn rewards in the process.
Notably, the minimum stake required to earn rewards on the ETH 2.0 blockchain is 32 ETH. Today, that would equate to a dollar value of $12,862, based on the current coin price of $402.
The 208% rise in Ethereum’s active address count coincides with a 212% increase in ETH’s token price since the turn of the year. While this may seem like a concrete metric at first glance, the spike in active addresses could also be attributed to the rise of decentralized finance (defi) applications, as well as the rise of DEXs, which naturally add to the number of ETH addresses used.
Likewise, the rise in the price of ETH also coincided with a rise in the price of Bitcoin, and the rest of the cryptocurrency market.