Tag: Ethereum Fees

Vitalik Buterin On How To Eliminate Ethereum Network Congestion And High Fees

by NEWSBTC

Network congestion on the Ethereum network is a very real and present issue, which has in turn brought about more real and pressing issues. Users of the network, especially small-time investors, have drawn the short end of the stick with these issues as they are the most affected. With fees skyrocketing, carrying out small transactions on the leading smart contracts network is becoming less and less feasible with each passing day.

The high fees and congestion have sparked discussions on how it can be eliminated. There are various developments in the pipeline, like the Consensus Layer (formerly known as ETH 2.0) and other suggestions made by developers. This time around, it is atheneum’s founder Vitalik Buterin, proposing a way to deal with the network congestion, and by extension, the high fees, on the network.

Blob-Carrying Transactions On Ethereum

In a conversation that was posted to popular social media platform Twitter, Vitalik Buterin and developer Tim Beiko put forward proposals that would help address the issue of high network congestion. With the adoption of the network growing at a rate not even anticipated by the creators themselves, it has now become a race to find the best way to properly scale the network. Here is where Buterin proposes a new feature called “blob-carrying transactions.”

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This feature would be added to a hard fork that would take place in the near future, explains Buterin. Blob-carrying transactions would allow for higher scalability for rollups in the meantime before the complete move to the consensus layer. It is basically a stopgap until sharing is implemented on the network. This new feature would be connected to both the Beacon block and the consensus nodes that are coming to the network.

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“This EIP provides a stop-gap solution until that point by implementing the transaction format that would be used in sharding, but not actually sharding those transactions,” the founder said. “Instead, they would simply be part of the beacon block and would need to be downloaded by all consensus nodes (but can be deleted after only a relatively short delay).”

When Is This Coming?

The blob-carrying transactions could possibly be deployed with the Shangai hard fork. It would provide a solution to mempool issues that continue to rock the network. Additionally, a solution for blob transactions and normal transactions that carry a large amount of data would be to “increase the minimum increment for mempool replacement from 1.1x to 2x, decreasing the number of resubmissions an attacker can do at any given fee level by ~7x,” the notes read.

Ethereum price chart from TradingView.com

ETH settles above $3,000 | Source: ETHUSD on TradingView.com

Ethereum still remains the network with some of the highest fees in the space. It is reported that fees can go as high as $300 in some cases when the network is clogged due to a high-profile NFT minting. Even the Layer 2 rollups that have been developed to help users deal with the high transaction fees have seen their own fees steadily increase as they are unable to accommodate demand.

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On the price side, Ethereum is doing well as it continues to follow closely the price of bitcoin. Both digital assets went into the weekend with bearish prospects and emerged on a bull trend, seeing ETH’s price breaking above $3,000 once again.

Featured image from Nairametrics, chart from TradingView.com

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Ethereum Fee Averages Remain Above $30 Despite 35% Drop. Price Pump Incoming?

by NEWSBTC

Ethereum fees remain high as the network continues to see some of the highest traffic in the industry. Daily transaction volumes put Ethereum in the billions per day and all of these transactions carry a higher than average fee. This fee structure which has caused concern among users seems to not be going anywhere, but there looks to be a light at the end of the tunnel.

Recently, the average transaction fee for Ethereum transactions has dropped significantly. In the past week, the average transaction fee for ETH transactions topped 35% in total, but it still remains on the high side compared to other blockchains.

Ethereum Fees Are Down

Data from BitInfoCharts shows that Ethereum fees are down over the past week. It correlates to a 35% drop in fee rates, however, the blockchain remains one of the highest in terms of fees. Leading up to last week, transaction fees were averaging around $50 per transaction. With the recent decrease, this number has now dropped to $35 on average per transaction.

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This is expected given the amount of activity the blockchain houses but it is still on the high side. According to this report, Ethereum users are paying about $40 million in fees daily, whereas rival Cardano only sees about $87K spend in fees on an average despite recording almost identical transaction volumes as ethereum.

Ethereum price chart from TradingView.com

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ETH trading at $3,257 | Source: ETHUSD on TradingView.com

The median gas fee for the network sits at about 0.0047 ETH or $14.78 for each transfer, considerably higher compared to other leading blockchains in the space. ETH miners are also getting some of the highest miner rewards, ahead of bitcoin miners. This fee structure is a pain point that is expected to be addressed in the move to ETH 2.0 in the coming year.

ETH Getting Ready For A Pump?

The decrease in transaction prices could spell good news for the digital asset. With transaction fees tumbling, it would allow for faster transactions. Also, with transaction fees down, it most likely means that more investors are opting to hold on to their digital assets rather than deciding to move them around, which could point to consolidation and accumulation on the part of these investors.

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With less ETH moving around on the network and onto exchanges for sale, then supply on exchanges are down during this time. Usually, notable recovery periods are preceded by periods of stretched out accumulation, where investors choose to pile on to their current holdings.

This, in addition to the fact that the price of the digital asset has been dropping for a while and is primed for a correction, ethereum may be getting ready for a bounce-back towards $3,500.

Chart from TradingView.com

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Ethereum bulls likely to profit $130 million on ETH options despite two-week slump

by Cointelegraph

Ether (ETH) investors have no reason to complain after the 344% gains accumulated in 2021 until Nov. 24. Still, analysts fear that the $4,000 resistance test on Nov. 19 is forming a descending channel that aims at $3,600 by mid-December, an 18% correction from the current $4,400 price.

Despite outperforming Bitcoin (BTC) by 16% in the past month alone and the ETH/BTC pair climbing to 10-week highs, Ether seems to be struggling with its own success.

Ether/USD price on Bitstamp. Source: TradingView

Users continue to complain about Ethereum gas fees, averaging over $45 over the past three weeks. However problematic that can be, it leaves no doubt that the largest decentralized finance (DeFi) and nonfungible tokens (NFT) markets continue to thrive on Ethereum.

Increasing regulatory uncertainties in the United States remain a decisive limiting factor for Ether’s rally. On Nov. 24, the Securities and Exchange Commission, or SEC, clarified that the crypto panel in the public meeting scheduled for Dec. 2 would focus on the regulatory framework.

Not even the one million ETH burned since the implementation of EIP-1559 in August was enough to keep Ether’s price at all-time highs. As the network emits about 5.4 million ETH per year, Ether remains an inflationary asset. Still, Ether’s price increased by 16% vs. Bitcoin since Oct. 25, partially reflecting that impact.

Bullish calls dominate Friday’s ETH options expiry

Despite the 10% correction to $4,400 since the $4,850 all-time high on Nov. 10, the Ether call (buy) options vastly dominate Friday’s expiry.

Ether options aggregate open interest for Nov. 26. Source: Coinglass

The green area representing the $820 million call (buy) options is the lion’s share of Nov. 26 expiry. Compared to the $440 million puts (sell) instruments, there’s an 87% difference.

Nevertheless, the 1.87 call-to-put ratio should not be taken literally, as the recent ETH drop will likely wipe out 77% of the bullish bets. For instance, if Ether’s price remains below $4,400 at 8:00 am UTC on Nov. 26, only $165 million worth of those call (buy) options will be available at the expiry.

In other words, what good is holding the right to buy Ether at $4,400 or $4,600 if it’s trading below that price?

Bears need sub-$4,200 ETH to balance the scales

Below are the three most likely scenarios based on the current price action. The number of option contracts available on Nov. 26 for bulls (call) and bear (put) instruments vary depending on the expiry ETH price. The imbalance favoring each side constitutes the theoretical profit:

  • Below $4,100: 15,400 calls vs. 15,200 puts. The result is balanced.

  • Between $4,200 and $4,500: 38,400 calls vs. 8,800 puts. The net result is $130 million favoring the call (buy) instruments.

  • Above $4,500: 50,200 calls vs. 2,300 puts. The net result favors the call (bull) instruments by $215 million.

This crude estimate considers call options being used in bullish bets and put options exclusively in neutral-to-bearish trades. Still, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a put option, effectively gaining a positive exposure to Ether above a specific price. But unfortunately, there’s no easy way to estimate this effect.

Both sides have incentives to move price

Bears need a 7.5% move from $4,400 down to sub-$4,100 to balance the scales and avoid a $130 million loss. On the other hand, bulls need a 2.3% price increase to $4,500 to boost their profits by $85 million.

Traders must consider that the amount of effort a seller needs to pressure the price is immense and usually ineffective during bullish markets. Currently, options market incentives are balanced, favoring the $4,200 to $4,500 price range, entitling bulls to a $130 million profit on Friday, Nov. 26.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.