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DeFi Hype Has Sent Ethereum Fees Soaring to 2-Year High: Coin Metrics

The knock-on effects of the DeFi hype include high fees and less active users on Ethereum, according to Coin Metrics.

By Paddy Baker, Omkar Godbole
AccessTimeIconJul 22, 2020 at 8:40 a.m. UTC
Updated Sep 14, 2021 at 9:34 a.m. UTC
Ethereum founder Vitalik Buterin (CoinDesk archives)

Ethereum founder Vitalik Buterin (CoinDesk archives)

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Ethereum fees are at a two-year high as the hype around decentralized finance (DeFi) leads to a surge in network activity, according to research firm Coin Metrics.

  • Coin Metrics' data shows median transaction fees were just under $0.50 at press time – the highest since August 2018.
  • Transaction fees increase alongside activity to avoid congestion in busy times.
  • Ethereum's median gas price – a component of the transaction fees – has also reached levels not seen since early July 2018, according to Glassnode.
  • Connor Abendschein, a research analyst at Digital Assets Data, said a "massive increase" in ERC-20-standard stablecoins had also contributed to a rise in gas prices.
  • In a newsletter Tuesday, Coin Metrics analysts argued the spike in transaction fees came from increased network usage related to the DeFi hype around yield farming.
  • Total value locked in DeFi projects recently passed the $3 billion mark, according to DeFi Pulse, having only crossed the billion-dollar milestone in February.
  • Ether transferred via smart contracts – a telltale sign of a DeFi transaction – was up to a near all-time high of one million ETH ($242.5 million) a day, Coin Metrics said.
  • The number of active ether addresses hit a two-year high a few weeks ago, but fell again as high fees pushed users off Ethereum, Coin Metrics said.
  • Richard Rosenblum, a co-founder of digital assets firm GSR, told CoinDesk the gas price spike was part of a wider scalability problem for Ethereum.

See also: Nearly $60M in Bitcoin Moved to Ethereum in June

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