Ethereum fees reach peak levels, Tether is to blame: report

It’s never been more expensive to get in on the Ethereum action.

That’s according to new analysis from blockchain intelligence firm Glassnode, who explored the source of skyrocketing fees that have resulted in nearly $7 million being paid in gas in a single day on Thursday.

The examination identified Tether as the single largest source of Ethereum gas spending, along with massive spending increases by DeFi applications such as Uniswap and arbitrage bots trying to keep the market at equilibrium. It’s all part of the increasing growing pains for Ethereum, as users hunt for returns in the lead up to fee relief promised with the arrival of Ethereum 2.0, the long-awaited upgrade to the network.

Of all fees paid on the Ethereum network so far in August, Glassnode found that 14% came as a result of transfers of Tether’s USDT stablecoin. Notably, all other stablecoin transfers accounted for just over 1% of all fees in August so far, indicating how popular the often-controversial stablecoin has become among Ethereum users. Simple transfers of Ethereum and ERC20 tokens have made up about 20% of August gas spending so far.

Glassnode found that about 65% of gas spent so far this month has gone to operations of smart contracts that go beyond transfers of stablecoins, ETH, or ERC20 tokens. Of those, by far the largest gas consumer has been Uniswap, which saw trading volume of more than $1.7 billion exchanged in July. 

So far in August, Uniswap has made up close to 40% of all gas spending among the top 20 most active smart contracts. All together, decentralized exchanges have accounted for more than 50% of all gas spending from the top 20 most active smart-contract designs.

Arbitrage bots, or scripts that buy assets from one source and immediately sell them for a small profit, have also been some of the biggest gas consumers among the top spending smart contracts, laying out nearly 20% of all gas spent so far this month. These bots have collectively spent more than $2.5 million in fees this month, with no signs of slowing down.

Ethereum 2.0 is in the final stages of testing and is expected to lower gas costs by increasing transaction processing from around 15 per second to more than 1,000 upon release.

Arbitrage bots and other savvy players might be able to continue uncovering value until that upgrade arrives, but for the average user, lower gas fees can’t come soon enough.