Ethereum transaction fees reach lowest levels since January
The average Ethereum transaction fees are at their lowest price since January, as activity on the blockchain declines
The average Ethereum transaction fees reached US$7,371 yesterday, the lowest since January 23, when fees averaged US$6,89.
Ethereum transaction fees are paid to miners who process transactions on the blockchain. Transaction fees are much higher during periods of heavy traffic. This is because the chain operates an auction that changes rates according to the miner’s offers and the user’s demand for them.
The miners did just that on May 12, when Ethereum hit a record high of US$4,363. Then, average rates came to US$69.92. Rates fell to around US$20 in the following days, before rising to an average of US$59.5 on May 19, just as the price of Ethereum started to fall.
Transaction fees are one of the biggest pain points at Ethereum. They make some services prohibitively expensive to use.
Exchanging currencies on Uniswap, a decentralized exchange, often requires multiple transactions, as Uniswap’s algorithm often exchanges currencies multiple times to fulfill trades. On May 11, exchanging a few cents in coins cost more than US$300.
Various updates to the Ethereum network can reduce these fees.
The first is EIP-1559, a proposal that burns ETH instead of delivering it to miners and is due to start operating on July 14. It aims to reduce the volatility of rates and, as a by-product, the cost.
The second is the upgrade from Ethereum to Ethereum 2.0. This introduces several features that are expected to reduce rates but will take years to implement.
If upgrading to Ethereum 2.0 takes too long, the risk is that competitors who already offer low rates may make Ethereum obsolete.
Disclaimer: The information expressed in this article are solely those of the author and do not necessarily reflect the views of CryptoDeFinance. Each and every investment and trading move involves high risk. You should always conduct your own research when making a decision in crypto investment. *with information from Bitcoin Portal,bitinfocharts,