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

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

That’s according to new analysis from blockchainblockchain intelligence firm Glassnode, who explored the source of skyrocketing fees that have resulted in nearly $7 million being paid in gasgas 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 DeFiDeFi 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 stablecoinstablecoin. 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 tokenstokens 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 contractssmart contracts. All together, decentralized exchanges have accounted for more than 50% of all gasgas 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 contractssmart 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.

Bitcoin fees pulled higher by DeFi-mania

Bitcoin isn’t missing out on the recent crypto price jumps, but it’s also joining Ethereum in a less impressive way—higher fees. Bitcoin fees are on the rise again, approaching levels last seen during the recovery from the March 2020 crypto crash, which was linked to the corresponding stock market decline.  On Thursday, they hit an average of $3.841, an increase of 151% since last Sunday. They’ve since fallen slightly; yesterday, the average Bitcoin transaction cost $2.9, according to BitInfoCha...

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.