Many might be familiar with the transaction fees on the Ethereum network set a new all-time high. Though, high transaction fee results in the development of yield farming and DeFi projects. And the yield farmers rotate the funds using the Ethereum network. So, the amount of yield farmer determines whether the price will surge or reduce. As of now, the Ethereum transaction fee is stagnant, marking a new high.
The new report published by Boxmining reveals that Ethereum transaction fee is now threatening the performance of DeFi applications and hampers smart contracts from growing. Furthermore, the Boxmining report indicates that the recent growth in the DeFi sector is now enabling some ICO bubbles to spark.
Apart from that, the Boxmining newsletter points out one project, in particular, Sushiswap, which has been in the news lately. Sushiswap is one of the prime reasons behind the recent surge in ETH transaction fees.
The rivalry between Sushiswap and Uniswap triggers a gas war
As we know that Sushiswap is a fork from the Uniswap which already registered $1.2 billion in funds, five days after the fork. Not just that, Sushiswap is considered one of the biggest adversaries of Uniswap in China. Even though these two are DeFi protocols, their dispute is triggering a new gas war.
While the higher gas fee stays in the favor of Ether miners, they are questioning the “sustainability of the network”. Notably, one part of the report highlights an integral concern that the Ether mining community is raising.
“Higher fees may even mean that some smart contracts become virtually unusable, thereby bringing the question of Ethereum being a smart contract platform in the first place into question.”
Organizations are keenly waiting for ETH transaction fees to decline and return to its average rate. Publish0x is among many platforms that have released an announcement claiming to pay its content writers once the ETH gas fee becomes normal.
Publish0x, a content producing outlet, says the sudden rise in the gas fees is not viable for the firm.
“When we first started Publish0x, gas prices were 6 gwei. It cost us $10-20 to pay out 2000 people. Today gas prices hit an all-time high of over 460 gwei, nearly 100x the cost. We’re looking at $2,000+ cost for a payout at current gas prices. This is obviously not economically viable.”
Solution to high gas fees
The current circumstances have forced the firms to start looking at other tokens to pay up their staff and wait until the gas fee falls back to normal. At the moment, high gas fee is a major concern and it has started bothering some of the firms. The Co-Founder of Ethereum, Vitalik Buterin recently posted a tweet addressing the ETH community worried about the fees.
However, its mainnet launch is 3 months away, thereby, some of the firms perhaps need to figure out an alternative to that in the meantime.