The fees associated with using some complex DeFi protocols has increased above $1,000amidst Ethereum’s rally into new price highs.
The rise inEthereum’s gas fees has rendered many decentralized finance protocols unusable for casual investors.
Average Ethereum transaction fees are now sitting at a record $17.67, after increasing roughly 20% between Feb, 3, and 4.
Reportedly, fees associated with using protocols requiring complicated transactions exceed $1,000, with many DeFi projects requiring the execution of complex smart contracts. Amidst the turmoil, estimated gas fees of nearly $5,000 to accept a bid on Rarible was reported by Twitter-user Olive Allen.
A single large transaction on Synthetix was estimated at above $1,100 when Cointelegraph checked earlier yesterday. However, the estimates could vary, now that the protocol is undergoing an upgrade.
Even simple swaps using decentralized exchanges Uniswap and SushiSwap cost from $40 to $75.
ConsensusRough podcast co-host, Checkmatewarned DeFi users while responding to the high fees. He cautioned the users to consider the expense involved in executing smart contracts before investing.
He even shared a screenshot of a user purporting to show estimated gas fees exceeding the price of Ether. While there is a chance that this could have been faked by the user, it’s largely in line with similar reports.
Even Bitcoin’s average fees currently exceed $14.
Notwithstanding the skyrocketing costs associated with utilizing the Bitcoin and Ethereum networks, traders remainoptimistic with Ether posting new high of $1,700.
So far Ether has gained 14% since breaking into new price highs on Feb. 2. Bitcoin is also improving, testing $38,000 after gaining 6% in just 24 hours on Feb. 4.
Ether’s record charges are featuring the utility of second-layer scaling arrangements ahead of Ethereum’s Eth2’s redesign. Synthentix is presently in a staged relocation to Optimistic roll-ups to improve gas cots. Other platforms are exploring rival layer-two solutions such as xDai, or scalable layer-one networks such as Polkadot.
Ankr Network CEO described the crypto rise as exposing many vulnerabilities of the Ethereum network which most DeFi projects are built upon.
However, to see a reduction in gas fees on the Ethereum mainnet,DeFi users may not have to wait until Eth2. Developer Tim Beiko in the month of January noted substantial development on the EIP-1559 testnet.
VitalikButerin and Eric Conner proposed EIP-1559 in 2019, advising the introduction of a burn mechanism to reduce fee volatility. However, it has received great opposition from Ethereum’s mining community. The proposal meant reducing miners’ revenues to small tips sent alongside a burned base fee, EIP-1559.
Grayscale speculates that EIP-1559 could create a positive feedback loop for Ethereum’s price if fee expenditures exceed the rate new supply’s creation.
The users should give thorough consideration to whether they will be able to unwind their Defi position. There is a likelihood that gas fees would be exponential when the time comes to sell.