After peaking at $447 on 17 August, the price of Ethereum has been moving lower. As ETH was currently being traded for $396, its miners were witnessing a sharp decline in their revenue as the Ethereum fees dropped by almost 80% from its all-time high on 22 August. The DeFi hype had maintained higher gas prices on Ethereum and the drop has enabled the price to return to its normal trajectory.
Despite a strong drop, the current gas price was still far higher than historical levels. However, the recent plunge helped the gas price to return to its linear trajectory. This drop aided in making Ethereum projects less expensive and provided the users with an opportunity for cheaper on-chain operations.
Nevertheless, the recent pump in the gas price still threatened to restrict Ethereum usage to higher net worth individuals, who stand to make profits that outstrip the gas cost of their trades, as per Glassnode’s observations. Reports suggested over 17,500 [USD$6.8 million] were being spent on fees daily on Ethereum and was mainly driven by DeFi and Stablecoins. The rising interest in DeFi and the use of Tether on Ethereum were the main contributors to the surge in gas price along with congestion on the network.
Recently, Tether announced to integrate into the OMG Network in order to wase congestion on the Ethereum network. However, this would only provide temporary relief, as DeFi applications are still raking-in large interest and now have about $6.9 billion worth of digital assets in terms of value, which was just $3.9 billion on 31 August. Thus, if the fees were to see lower levels, the DeFi hype has to subside quite a bit until scaling on the Ethereum network can be improved substantially.
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