Although Ether (ETH) value over the last fortnight continued to show increasing signs of stability around the $ 1,800 range, front-end altcoin users were in the face of rising gas charges as well as increasing network congestion issues. To put things in perspective, since the summer of last year, at a time when DeFi boom began to peak, Etherea network charges more than doubled.
Although this increase in fees is directly linked to the growing value of ETH, it cannot be denied that it also clearly shows the growing demand for ERC-20 tokens, stablecoins and, in general, for various decentralized financing-based offers.
As can be seen from the chart below, the cost of facilitating transactions on the Ethereum network has increased significantly over the last few months, with the average transaction fee reaching a historic high of $ 39.49 on 23 February.
Not only that, on March 20, the average transaction fee is $ 16, which is a price point that is relatively high, especially for developers and those who want to facilitate low-value transactions.
Also as broken tokens continue to receive mainstream, it is logical that transaction costs in the Ethereum network will continue to rise in the near future. Thus, until a viable scaling solution is implemented in the near future, it is likely that network congestion and high transaction costs will continue, especially as the NFT sector continues to benefit.
Is the network down?
Jay Hao, CEO of OKEx Cryptocurrency Exchange, said his thoughts on the current state of Etherum and told Cointelegraph that Ethereum is definitely at the inflection point along with other Tier 1 solutions, adding: you risk losing to competitors who can offer lower fees and higher throughput. “He also added:
“Ethereum still has by far the largest development community, as well as the number of DApps built on it, but satisfaction is still a killer.”
And while Hao believes that Ethereum will eventually be able to cope with its problems in the future, the cryptocommunity no longer wants to wait for the transition to proof-of-stake and Eth2 to be completed, especially as a growing number of developers and other network users begin expanding their operations. and transition to alternative ecosystems.
For example, many platforms have integrated different versions of Tether (USDT) and USD coins (USDC) – a la Algorand, Tron – enabling traders with stable cryptocurrencies to carry out transactions quickly and at a fraction of the cost currently collected by the Ethereum network.
In addition, the number of EVM-compatible blockchains has increased – OKExChain, Binance Smart Chain, etc. – and they question the dominance of Ethereum. “The competition is healthy and is forcing established players to go better and focus on giving users the experience they deserve,” Hao said.
However, Jack O’Holleran, CEO of Skale Labs – a decentralized PoS network compatible with the second layer compatible with the Ethereum network – believes that growing problems with network gas charges will be alleviated as he continues to strive for scaling, adding:
“Mainnet Ethereum will evolve into a basic layer of security and settlement.” The scalability layers will sit on top of Etherea and provide features for intelligent contract execution and low gas charges. We will also see the rise of application-specific blockchains that provide greater cost-effectiveness with greater predictability. “
What is an upgrade in Berlin?
After months of planning, the Ethereum community recently set a timetable for the implementation of “Berlin” p upgrade designed to work on the Ethereum mainnet in block 12 244 000 or 14 April. In this regard, it should be noted that a total of four Ethernet enhancement protocols will be deployed as part of Berlin.
These include the EIP-2565, which seeks to reduce the cost of ModExp precompilation, which will help calculate gas costs; EIP-2929, a proposal to “increase” certain gas costs; EIP-2718, which introduces a new transaction module; and finally EIP-2930, which contains a transaction type with optional access lists.
To facilitate the upcoming transition, Ethereum node operators have been advised to upgrade their operations to nodes that are compatible with Berlin before 7 April. Exchanges, wallet service providers and Ether token holders are not required to make any modifications to their end.
Will “Berlin” help ease the growing pain of Ether?
Cointelegraph spoke with Maxim Blagov, CEO of Enjin, a blockchain-based gaming system and DApp ecosystem, to get a better idea of whether the Berlin upgrade really shakes the Ethereum ecosystem and helps alleviate many of its existing problems. In his view, the Berlin update is an important step towards creating a better user environment on the Ethereum platform, in particular as regards the estimation of gas costs, and adds:
“We cannot assume that this will have a significant impact on the price per transaction.” Deep structural changes will be needed to bring Ethereum in line with user expectations. Newcomers to the NFT market often expect free instant transactions, and unfortunately nothing like this will be achievable in the current state of Etherea. “
“Winston,” the moderator of Harvest Finance’s revenue aggregator, told Cointelegraph that he saw no major fee cuts due to Berling’s upcoming update, adding: “There are several EIPs that can help users save on gas, but there is also EIP-2929, which in fact, it increases the fees for some transactions. “
Hao believes that while the upcoming update may generally help reduce gas charges, the community will begin to see more satisfactory solutions to Etherea’s problems in the medium term. He added that while Berlin may be able to temporarily alleviate gas charging problems, it will not be able to address long-term network scalability issues.
In his view, Ethereum will have to work on incorporating rollups and other second-layer scaling solutions, such as Polygon, to provide a meaningful and sustainable medium-term solution to its problems, while Ethereum 2.0 is fully deployed.
However, O’Holleran said on this issue that the upcoming upgrade is relatively robust and holistic in its outlook, and in combination with the EIP-1559 is an effort to reduce and anticipate fees:
“Miners will gradually be paid less time, but this will make Ethereum more usable and increase the value of the network, which will ultimately be a victory for miners and developers alike.”
EIP-1559 and others
The most anticipated upgrade to the Ethereum network – EIP-1559 – is criticized to go live sometime in July. The design will be packaged with a “London” hard fort and will seek to address a number of issues with the Ethereum user experience. For starters, it will look like redirecting the native Ethereum gas charge to the network itself instead of the miners. This charge will then be incinerated, allowing a gradual reduction in the total ETH stock.
On paper, the upgrade seems like a welcome change, but the pay ratios are expected to fall by an incredible 50%, something that has angered the Ethereum mining community so much that many have even advocated demonstrative network takeover – potentially compromising network security.
So with all these steps to address the fees issue that are on the table, it remains to be seen how the Ethereum network can handle the growing demand and whether it can quickly deliver a solution that everyone welcomes.