The Ethereum network is so congested right now, traders are reporting paying as much as $40 for Ethereum transaction fees.
Project owners are currently fighting and outbidding each other for ETH blocks. As a result, spike fees to unseen before levels.
1/ Just tried to make an Ethereum transaction and suggested fees were over $40.
Looks like mean block fees shot up to over $30 for some blocks earlier today.
— Nate Maddrey (@natemaddrey) November 22, 2019
Possible reasons for high Ethereum network transaction fees?
Why are Ethereum transaction fees so high? Well, there could be two reasons for the significantly higher fees on the Ether network.
1. Gods Unchained marketplace launch
The Gods Unchained (Legends of the Gods) marketplace was officially launched two days ago. The platform runs on ERC-271-based, non-fungible tokens.
The official Gods Unchained marketplace is NOW OPEN!
Complete your dream deck, or list cards for sale inside the game client 🛒 pic.twitter.com/JrJSCtKxO9
— Gods Unchained (@GodsUnchained) November 22, 2019
Such big marketplace launch has a history of clogging or even crashing the Ethereum Network. Crypto collectibles was the last to do it. Ethereum transaction fees shot up to the room after that launch.
2. DeFi Smart Contracts
Another possible reason for the spike in Ethereum transaction fees is DeFi. The decentralized finance project has been firing a number of smart contracts on the Ether network in the pass few days.
As the event was happening, Ethereum (ETH) price tanked from $180 to $145. The owner of those smart contracts could be competing with each other for blocks. They may be willing to pay higher fees for timely activities.
⚠Over 200 CDP liquidations happened in the last 24 hours.⚠️
Our Automation system has kept 70+ CDPs on both SCD and MCD with over $3Million worth of collateral safe🛡️ throughout the crash. Enable at: https://t.co/HG8vTdnVfl
Don’t let yourself show up on the @MakerRekt feed.
— DeFi Saver (@DeFiSaver) November 22, 2019
Although the Ethereum network is currently experiencing some congestion, the spikes seem to be random. Transaction capacity seem to reach 84% on average, with the highest at 94%.
The last time the Ethereum network witnessed this level of capacity was in 2017 and 2018, during the ICO boom.
What are you thoughts on the sudden spike of Ethereum transaction fees? Please share your opinion using the comment form below.