The developer of the 2nd largest cryptocurrency Ethereum [ETH] is turning their focus back to the present version of the network after months of working in the upcoming Ethereum 2.0 release to deal with exponential fee growth.
The surge in fees is being driven by the explosive popularity of DeFi apps that are predominantly built on Ethereum [ETH].
The average network fees reached $15.21 USD recently on Wednesday, up 660% from $2 USD a month ago. Ethereum’s median fees also spiked nearly 900% over the same period, now touching $8.95 USD.
In a bid to ameliorate soaring fees, Ethereum co-founder Vitalik Buterin revealed his Ethereum Improvement Proposal (EIP) 2929 recently on Tuesday that proposes ensuring heavy contracts more costly by a factor of three.
Steep network fees are a “double-edged sword” for Ethereum, said Wilson Withiam, Ethereum analyst at Messari.“They can keep off potential users,” he added. But rising fees also signify “an increase in network utilization & demand for block space.”
As the fees increase, entities liable for large on-chain transaction volume are looking for new techniques to scale back pressure on the network.
The leading stablecoin Tether [USDT], the 2nd largest client of Ethereum gas fees, will “investigate” the addition of an Ethereum-scaling technique referred as zk-rollups that permits transactions to be batched off-chain & reduce transaction pressure on the network.
“The idea behind zk-rollups is aggregating multiple operations [transfers, smart contract calls, …] into one single L1 transaction that ‘compress’ all the underlying transactions,” as per Tether CTO Paolo Ardoino. “Zk-rollups are at the instant the foremost comprehensive L2 solution for the Ethereum scalability problem.”
As transaction fees still increase, largely caused by the continued explosion of DeFi, this is often causing DeFi to “slowly become a game reserved for the wealthy,” Withiam added.