After the ether token surpassed the $ 1,000 mark on January 3, the network’s average transaction fee also skyrocketed to a new historical record (ATH) of $ 17.41, about 24 hours later. Although the average rate has declined since then, January 8 data shows that the most recent average rate was $ 9.79. This figure is still well above the $ 3.56 seen on the first day of the new year.
Resurgent ETH rates
Prior to the new ATH, the Ethereum network’s highest previous average rate of $ 12.54 was recorded on September 1, 2020. At that time, some crypto enthusiasts attributed this increase to the hype of decentralized finance (defi). However, as the deficit began to dissipate, ETH’s transaction fees gradually declined.
However, as recent data shows, the network’s transaction fees, which averaged less than $ 5 in much of the fourth quarter of 2020, now stood above $ 9 every day except January 2, 2021. This high-rate return on the network comes more than a month after the migration of ETH to a proof of participation consensus (POS) mechanism.
Meanwhile, the latest data shows that, at current rate levels, it now costs the same or even less to make transactions on the BTC network than on the ETH network. To illustrate, in the period during which ETH rates increased for the new ATH, BTC’s transaction rates remained within the same range. For example, throughout the fourth quarter, BTC network fares reached $ 13.41 on October 31.
For much of the fourth quarter of 2020, fees on the Bitcoin network fluctuated between the October 31 high of $ 13.41 and $ 1.44, the lowest average in that period. Likewise, on the BCH network, whose encryption has increased by more than 100% since October 1, fees remain below $ 0.01 per transaction.
Upgrade to fix the high rate issue
Meanwhile, Kamil Brejcha, founder of Dexfin, offers the possible reason why ETH rates have increased and how continuous updates will fix this. Brejcha explains:
“We face high rates of ETH because the Ethereum chain still depends on miners to produce blocks. The current update is called the Beacon chain, which allows depositing Ethereum for stakeout nodes. These nodes run on their own blockchain, which is not yet part of the core network. “
The founder of Dexfin also details the update process that starts with the Beacon chain. In 2021, the next Shard chain will follow before the merger of the two in the year 2022 or later. Thereafter, “the speed of the transaction should improve further, also reducing the rate of gas”.
What do you think is causing the ETH network rates to go up? Tell us your opinion in the comments section below.
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